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38 real estate bigwigs. Thirty-eight opinions. One city.

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“When our portfolio reaches 100 percent occupancy I’ll take a summer off and intern at Live Nation.” —David Zar

“Rikers Island...could be the most transformative place-making initiative of the decade.” —MaryAnne Gilmartin

PORTRAITS BY JOHANNA GOODMAN

8

Cuomo vs. 421a Was the governor responsible for the program’s demise?

12 Diversity blues Programs for women and minorities aren’t doing enough.

18 Best. Office. Ever.

69 Buy, sell, hold? Goodbye, bulls; hello, bears!

74 Brexit redux Will NYC benefit?

86 Lightning round A breakdown of the answers

100 The numbers  Who’s borrowing and how much

NYC’s greatest work places

22 The non-pros The biggest landlords who are not in the real estate biz

46 Hill vs. Don So, who’s everybody voting for?

60 What if...? Landlords’ second life

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COVER: Clockwise from top center: Ric Clark, Larry Silverstein, Toby Moskovits and Sandeep Mathrani. COVER ILLUSTRATION BY GUY STAUBER

Q&A Nicholas Bienstock John Catsimatidis Isaac Chera Ric Clark Charles Cohen Tommy Craig Douglas Durst Justin Elghanayan K. Thomas Elghanayan Ziel Feldman Ken Fisher Ira Fishman Scott Galin MaryAnne Gilmartin Francis Greenburger Jeffrey Gural Marc Holliday Jonathan Iger Steve Kaufman David Kramer

30 32 34 36 38 39 40 42 44 48 50 52 56 62 64 66 67 68 70 72

Jared Kushner

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Robert Lapidus

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Richard LeFrak

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Jeff Levine

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Anthony Malkin

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Sandeep Mathrani

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Ron Moelis

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Joseph Moinian

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Toby Moskovitz

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Jason Muss

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Michael Phillips

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Eran Polack

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Daniel Rashin

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Gregg Schenker

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Larry Silverstein

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Jonathan Simon

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Norman Sturner

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David Zar

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Editor’s Note

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n 2016, a lot of Americans—including your mild-mannered Commercial Observer editor—have gone poll crazy. We’ve got a national election weeks away, so it’s only natural to check FiveThirtyEight, The Upshot and Real Clear Politics poll trackers six or seven times a day, right? For a busy person, this is unquestionably a waste of time. If you check the polls in the morning, you pretty much know where the race stands in the evening. And even if there are some devastating new numbers, does finding out about them at 3 p.m. on Monday really help your side more than if you found out at 9 a.m. on Tuesday? But more than just keeping us apprised of the horse race, I think there’s another reason polling has been such a big topic this year: America has something on its mind. The polling data is the best way to try to piece it together. CO’s Owners Magazine can be viewed as its own kind of polling of the real estate industry— but in an extremely targeted and unscientific way. We asked the same questions to 38 of the biggest owners in New York City (many of whom own property well beyond the Empire State) and compiled what they had to say in these pages. For the most part, we asked questions we felt owners could have enough room to opine on: Is there a bubble in the hotel sector? What

underdeveloped markets excited them? What do they think the Brexit vote will do for New York real estate? And (naturally) who are they supporting for president? Some of our questions proved to be duds. We were hoping for a provocative answer to “Who’s to blame for the 421a debacle?” but almost nobody took our bait. Terence Cullen attempted his own answer in his story on page 8. But we also got a strong sense of the shift that has occurred in the market over the last 12 months. We asked whether they were buying, selling or holding, and the most common answer by far was “Hold!” Readers from all sectors of real estate should take note of that. Of course, we didn’t intend to just regurgitate whatever the owners fed us. We tried to include stories about ownership, too. Lauren Elkies Schram reported on New York’s owners like the city, or NYU—whose business is not primarily real estate—and how they manage their portfolios (page 22). Liam La Guerre took a hard look at the city’s Minority and Women-Owned Business Enterprise (MWBE) program and where they’re falling short (page 12). Danielle Balbi culled the data from some of the biggest owners who didn’t fill out our survey and asked who was financing their projects (page 100). All in all, we view this magazine as a valuable

trove of data. This is what is on the minds of the city’s developers and landlords. Now, if you’ll excuse me, I haven’t refreshed FiveThirtyEight in a good 20 minutes…

Max Gross, Editor-in-Chief

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KILL BILL One of the most touted affordable housing incentives died an ignominious death earlier this year. Are Gov. Andrew Cuomo’s fingerprints on the murder weapon? BY TERENCE CULLEN

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n aide to Gov. Andrew Cuomo recently—and without much solicitation—rambled that his boss was one of the most successful executives in the history of New York State. He gets things done, the aide said. That’s been true in many, many cases. Cuomo legalized same-sex marriage his first year in office, followed it up with a sweeping gun-control bill a year and a half later and has poked the legislature to pass six on-time budgets. In short: Cuomo does not like to lose. So when he does, like with the expiration of the 421a tax abatement—which is not just a local housing issue, but perhaps the driving force of the real estate boom for more than a decade—the question for the 58-year-old son of the outer boroughs is, Did he want to lose? After all, the governor insisted more than a year and a half ago that organized labor and developers agree on a prevailing construction wage in order for the tax break, which is needed to create middle-class housing, to continue. This may have seemed overly combative. Or, doomed to failure. Some believe Cuomo was siding with the Building and Construction Trades Council of Greater New York, one of his major campaign boosters. Others believe it was simply a chapter in his ongoing feud with Mayor Bill de Blasio. Then there’s the argument that Cuomo completely punted on the controversial program, leaving it to the unions and the Real Estate Board of New York to make an agreement that was never going to be reached. “This is just a pissing contest between the mayor and the governor,” said a veteran real estate professional, who added it was irresponsible for elected officials to leave it up to the unions and REBNY to decide the future of the legislation. “Did they really expect that they would come to an agreement?” And it’s not just real estate professionals, let alone observers within the five boroughs,

who are pinning the blame on Cuomo. “Gov. Cuomo has destroyed the 421a program,” said Republican Westchester County Executive Rob Astorino, who lost the 2014 gubernatorial election to Cuomo. “It worked for years and years [and] helped create affordable housing, which is needed. And he probably did it just to attack Mayor de Blasio, which is so irresponsible. Because there are a lot of people that are involved who are going to get hurt with this issue.” Astorino, who has been a consistent outspoken critic of Cuomo, is the latest prominent New York player to put the onus on the governor. The New York Post, the New York Daily News and the New York Observer are among the editorial boards that have called on Albany to clean up a mess the papers allege legislators made. “The toll of lost opportunities will only grow,” the Daily News wrote in July. “Cuomo has an obligation to reverse the damage.” In June, Republican Senate Majority Leader John Flanagan said the 2015 expiration of 421a was a “missed opportunity” to reform the bill instead of letting it end twice in six months. Flanagan, who represents parts of Suffolk County, called on Cuomo to get all the related parties together to come to an agreement. “No one can provide greater leadership in this area than the governor of the State of New York,” Flanagan said at a New York Building Congress event earlier this year. “In my humble opinion, he puts everybody in a room, sits everybody down and tells everybody, ‘Nobody is going home until things are negotiated and compromised;’ then I think we can get there.” There’s no denying that Cuomo is a master mediator. In the summer of 2014, the Democrat brokered a last-minute deal between the Metropolitan Transportation Authority and the union representing Long Island Railroad workers—avoiding a strike that would have shut down the transit system. Since taking office nearly six years ago, Cuomo, whose representatives

ILLUSTRATION BY WESLEY BEDROSIAN

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did not return a request for comment, has been masterful in getting Albany to work. And that’s what makes the saga of 421a all the more interesting. (Or, suspicious, if you will.) For those of you just tuning in, 421a—a program that has been around in some form or another since the 1970s, and offered decades of tax exemptions on new construction with multiple dwellings in exchange for below market-rate housing—expired in June 2015 as the Albany legislative session ended. De Blasio and REBNY, not always allies, came to a framework agreement near the end of last year on a plan that dedicated a higher percentage of a building as affordable than the previous 20 percent. Legislators couldn’t see eye to eye before the session ended that June. A week later, Cuomo announced he’d roll 421a over for six months, until Jan. 15. REBNY and the Building Trades Council had until that point to agree upon a prevailing construction wage—basically an augmented salary benchmark for skilled labor. Any 421a package approved after that point would have also required union labor for large-scale projects. “We need the parties holding up a resolution to get back to work because every day without the reformed program hurts New Yorkers who need affordable housing,” a de Blasio spokeswoman said in an emailed statement. She put the blame on Albany, saying, “You broke it, and now you need to fix it.” Many in the pro-development world have argued that the economics of building affordable housing cannot work if you’re paying an even higher construction wage. But why? Multifamily buildings are in the highest-taxed category of all New York City properties. Developers argue that it’s difficult to make the economics work for rental housing, in which profits are more long term than building condominiums, because the taxes are too high. Having union labor with an augmented wage becomes even more costly, especially if you’re assigning 20 percent of your units below the market average. “Policymakers have a clear choice,” REBNY President John Banks said in a statement, adding the wages being sought were too high to make finanicially viable. “They can choose to pay ironworkers more than $235,000 per year and carpenters more than $195,000 each year to build affordable housing. If so, there will be less affordable housing built or taxpayers will be asked to pay an exponentially larger tab.” REBNY declined to comment on whom was at fault for the tax break expiring. Nonunion construction groups

such as the Associated Builders and Contractors have been critical of Cuomo and organized labor in the 421a hoopla. Brian Sampson, the leader of the group’s Empire State chapter, said Cuomo’s commitment to build affordable housing didn’t make economic sense. The unions, Sampson alleged, had also set their salary requirements too high, pricing themselves even out of New York City. “[Cuomo] bears the vast majority of the blame,” Sampson said. “The rest of the blame falls to the Building Trades and the leadership there.” Building affordable housing hasn’t required using union labor, either, said Howard Husock, the vice president of policy research at the right-leaning Manhattan Institute think tank. Developers who specialize in these types of buildings will actually use nonunion labor to reduce labor costs on a project that is guaranteed to have lower returns than your normal New York rental building. “It’s a little mystifying on why [Cuomo] insisted on a prevailing wage, or a union wage, for these kinds of developments,” Husock said. The Building Trades Council did not respond to a request for comment via a spokesman. The expiration, no matter whose fault it is, is expected to have a long-term impact on the city. State and city officials have maintained that there are plenty of projects in the housing pipeline to keep people working for at least two years, while meeting the de Blasio administration’s goals of creating more affordable units. That’s because developers rushed to get their projects approved before the tax break expired. But there are already indications, however, that a development slowdown is on its way. The New York City Department of Buildings approved 34 percent fewer new projects in Brooklyn and 14 percent fewer buildings in Manhattan for the first half of 2016 compared with the same time two years earlier (the first half of 2015 was factored out because of a filing rush before 421a expired), as Commercial Observer reported in August. “New construction is dwindling,” said Robert Knakal, the chairman of New York investment sales at Cushman & Wakefield, who added that the city was in dire need of a return to 421a but declined to take sides on the matter. “It’s almost dried to a trickle.” The recent 421a war has been fought out on all fronts, from the conference room of REBNY to the committee rooms in Albany. This year’s session was something of a legislative tennis match, with efforts to revive the program being lobbed between the Democratic-controlled Assembly and

We have to have something like it or a direct subsidy. Whatever you call it. 421a, 312, a, b. We can’t wait.

the Republican-controlled Senate. Assemblyman Keith Wright, a Democrat, introduced a bill in March that would have supplemented some of the affordable housing created by 421a. REBNY said it was a step in the right direction but didn’t do enough to replace the tax break. A billed dubbed 421aa appeared in the State Senate’s rules committee at the end of this year’s legislative session that laid out new wage guidelines. The Building Trades Council panned the proposal and said the numbers in the bill were too low. Cuomo has made his own attempts to float new proposals that would revive 421a in some way, shape or form. The New York Times reported in August that he pitched a new plan to REBNY that would have lifted the union requirement but increased labor wages on larger projects in Manhattan as well as posh areas of Brooklyn and Queens. While the unions supported that idea, there was backlash about the fact that the state would subsidize those augmented wages. One source within the real estate industry said that a suggestion to use taxpayer money for private development was “just preposterous. It’s the most stupid idea I’ve ever heard.” Politico New York reported in late September that Cuomo was again meeting with REBNY officials to come to an agreement on reviving 421a. It wasn’t clear what Cuomo discussed with prominent REBNY members including Chairman Rob Speyer of Tishman Speyer, Douglas Durst of Durst Organization and Gary Barnett of Extell Development Company. “Hopefully, they can all get back to the table and come up with a solution that the governor is not going to torpedo again,” Astorino said. Councilman Jumaane Williams, who represents parts of central and southern Brooklyn, doesn’t think Cuomo was wrong to attach the prevailing wage to the continuance of 421a. He even said he wished additional things were tacked on, such as a mandate for local hiring in relation to where a project was. “I think greed is the issue more than anything else,” said Williams, who sits on the council’s land use committee. “I think we needed to add more. I think the feud between the governor and the mayor is hurting us.” At the end of the day, Williams joined the chorus of New York players who said some kind of replacement to 421a has to come soon. “We have to have something like it or a direct subsidy,” he said. “Whatever you call it. 421a, 312, a, b. We can’t wait.” With additional reporting provided by Madina Toure.

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Don Peebles.

SASHA MASLOV/FOR COMMERCIAL OBSERVER

Empty Promises New York’s MWBE program pledges big things but a lot of women and minority owners still aren’t getting their foot in the door BY LIAM LA GUERRE

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t the end of last month, Gov. Andrew Cuomo announced who would be awarded one of the sweetest plums in development that the state had to offer: the redevelopment of the James A. Farley Post Office (a.k.a. Moynihan Train Hall) on the West Side of Manhattan. The 1-million-square-foot project promises to be worth $1.6 billion. Just about any developer would jump at the opportunity. If you ask R. Donahue Peebles, however, it might have been nice if the state hadn’t picked developers like Related Companies and Vornado Realty Trust (who received the contract)—and maybe given one of the women or minority-owned firms a shot. Or, at least, made them a minority partner on the project. “There has not been one major real estate development project awarded by the state to a minority developer in Gov. Cuomo’s tenure in office, and there have been opportunities to do so,” Peebles, who founded the Peebles Corporation (and who did not bid on the project), told Commercial Observer. What might even be more galling is the fact that this is Vornado and Related’s second chance at Moynihan Station. The two developers originally won the right to develop office and retail space at the site a decade ago but have been stuck in a holding pattern ever since. “For Moynihan Station, [the state] went with Related and Vornado—the same people that have had the property tied up for 10 years,” Peebles

said. “Imagine that a minority firm hasn’t performed in 10 years. You think they’ll get back the project for a second time?” This is one of the issues that the city, state and developers all struggle with. The big firms—which tend to be whiter, richer and much older—still get a lot of the breaks when it comes to the public development projects. This is despite the fact that the state has laws in place, which guarantee that a portion of their projects should be reserved for women- and minority-owned businesses. The state’s Minority and Women-Owned Business Enterprise, or MWBE, program was founded in 1988 to promote diversity and is overseen by the Empire State Development Corporation. It certifies companies that are 51 percent owned and operated by minorities or women as eligible for the program. And, yes, they do guide work to these firms. However, the problem is that MWBE participants have gotten largely ancillary roles as subcontractors and consultants when it comes to the big projects. The state recently gave itself a hearty pat on the back in an Oct. 6 press release from the governor’s office awarding $2 billion in contracts (not just in real estate) to minority- or women-owned businesses—25 percent of the nearly $8 billion it awarded from fiscal year 2015 through 2016. This is up from nearly $1.7 billion to MWBE firms from the prior fiscal year. The state awarded about $150 million in contracts for the redevelopment of LaGuardia Airport and more than $30 million for work on three of the state’s planned casino projects, to name a few assignments.

And one can point to a few other projects— more in the 100,000-square-foot range—that have gotten contracts through the program but usually in minority partner status. For instance, there is the 100,000-square-foot conversion of the Bayview Correctional Facility at 550 West 20th Street. The Goren Group, a women-owned business firm founded by Lela Goren, is the minority developer, with the NoVo Foundation as the primary developer (headed by Peter and Jennifer Buffet, Warren Buffet’s son and daughter-in-law, respectively). This is not to say that there aren’t people at City Hall and in Albany who aren’t aware of the problem. The city has a separate law for MWBEs. According to City Comptroller Scott Stringer’s office, of the $14 billion in contracts the city doled out last year, only 5.3 percent went to city-certified women-or minority-owned businesses. This is despite the fact that women make up 52 percent of New York City’s population and minorities account for roughly 60 percent of the city population, according to the 2014 American Community Survey. “Now, I could tell you it should be 30 percent or 35 percent,” Stringer said in a speech on Sept. 22. “But the point is, at the rate we’re going, we won’t see real change for another 20 years.” A city spokesman contested Stringer’s figures. “Stringer’s 5 percent [figure] misrepresents our efforts,” the spokesman told CO. “His calculations include billions of dollars for areas inapplicable for MWBE participation, such as awards to nonprofits.” The spokesman said the number

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Moynihan Station.

COURTESY SOM/BRICK

should be closer to 14.3 percent. But almost in response to Stringer, Mayor Bill de Blasio announced a few days later, on Sept. 28, a goal to increase the dollar amount of city contracts to 30 percent by 2021. At the same time, de Blasio opened a new city office headed by Deputy Mayor Richard Buery dedicated to the MWBE initiative. Naturally, plenty of people in the MWBE program were extremely pleased with the mayor’s announcement. “I have two sisters, both own companies, and it was a very big struggle for them,” said Paul O’Rourke, the chief operating officer of general contractor E.W. Howell. “Times change, the mandate comes out, and you have to change with the times. If that means hiring someone and taking a couple of dollars out of your pocket, then so be it. I think the capacity is a challenge, but it is achievable.” O’Rourke said they’ve hired a full-time MWBE coordinator and a consulting group to help build relationships with MWBE firms. Other MWBE advocates were unconvinced by de Blasio’s promises. “I applaud the mayor for reorganizing the agencies responsible for administering the city’s MWBE programs by consolidating the responsibility under one deputy mayor,” said Louis Coletti, the president and CEO of Building Trades Employers’ Association. “We need to find a way to ensure that

the city can achieve these goals, but at this point I’m skeptical that 30 percent is achievable.” Coletti further explained: “The MWBE certification process isn’t working for anyone. It isn’t working for the MWBE community because their assumption is that when they get certified by the city, it’s going to lead to contract awards, and that hasn’t been the case.” Indeed, the hoops the minority- and women-owned businesses have to go through to get MWBE certification oftentimes make it seem not worth the effort. “I’d rather be chasing opportunities that no one else is looking at,” said Heidi Burkhart, the

founder of eight-year-old affordable housing brokerage and consulting firm Dane Real Estate when asked why she didn’t pursue the certification. “The time and energy put into it doesn’t make much sense to me.” And while a lot of firms claim they want to work with MWBE-certified businesses, they often fail to put in the effort to really track them down. When Barbara Kavovit—the owner of Evergreen Construction, who recently got certified—began talking to CBRE and the Metropolitan Transportation Authority about possible work it was because of her connections, not the other way around.

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“They didn’t go through the state directory to find me,” Kavovit said. “You don’t just sit there and wait for the state to call you. You get your certification, and you market it the best way you know how.” A glitch in the state’s MWBE program is that it makes things easier for women- and minority-owned firms in their infancy but prohibits companies from growing; there is a personal net worth cap of $3.5 million for their founders. “The first time they have any kind of success they are kicked out,” said Peebles, who is worth $700 million, according to Forbes. His company is working on about $4 billion in development around the country, Peebles said. But this is not to say there haven’t been extremely notable success stories, due in part to the program. Jodi Pulice, the founder and president of brokerage JRT Realty, counts marketing and leasing 1 World Trade Center for the Port Authority of New York & New Jersey among her biggest achievements. Pulice, who has partnered with Cushman & Wakefield since 2003, worked with the global company on the tower since it required some MWBE participation. “[The certifications have] differentiated us and whenever you are different in any industry there is always an attraction,” Pulice said. “We happen to be completely professional and good at what we do. But a lot of times early on we didn’t have

There has not been one major real estate development project awarded by the state to a minority developer in Gov. Cuomo’s tenure in office, and there have been opportunities to do so.

the opportunity to show how good we were. This brought us to the table and allowed us to compete.” And Michelle Ryckman, the president and founder of the 15-employee firm Insight Civil Engineering, started her company five years ago and, shortly after, registered with the state and city as a woman-owned business. Now her firm is the subcontractor working on the engineering plans for de Blasio’s citywide ferry system. They have worked with the landscape architects to connect the 15 new landing docks to electrical conduits around the city that will be implemented with the current ferry ways. “We would not be where we are without it,” Ryckman said. “It really has been the catalyst to our engineering firm growing.” “To be quite frank, I hope some day women in business don’t even need this,” Pulice said. “But if it’s the starting block that we have to use, then I am more than willing to do it for everyone that comes after me. But hopefully someday there is no such thing as an MWBE certification process.” In the meantime, the smart firms are using the program to the fullest extent they can. “The construction industry, it’s like the Flintstones,” Kavovit said. “It’s a breath of fresh air to see a women on the job site. I think it’s very welcomed by people that want to learn that there is an option.” With additional reporting provided by Cathy Cunningham.

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Heigh-Ho, Heigh-Ho, It’s Off to WeWork We Go

New York City’s bigwig property owners aren’t losing sleep over the coworking giant’s rough year BY DANIELLE BALBI

THE NUMBERS MAY BE A BIT OFF “I don’t see them going belly up,” said Jonathan Simon, the founder, chairman and CEO of Simon Baron. “They provide a very unique product. They may be overvalued in the short run, but the model should continue to work. I wouldn’t be surprised if the valuation goes from $16 billion down to $4 billion overnight.” Earlier this year, Bloomberg reported that WeWork’s revenue estimate was cut by 14 percent, and there was a 63 percent surge in projected negative cash flow due to delayed building openings and construction spending. Francis Greenburger, the chairman and CEO of Time Equities, pointed out that the coworking concept is here to stay regardless, “even if WeWork’s current financial model does not work.”

COURTESY WEWORK

N

ew York City landlords have thick skin. It comes with the territory. And that’s why none of them seem too concerned (if at all) about WeWork, even with the rough summer the $16 billion shared-space startup has just put behind itself. When we asked Larry Silverstein, the chairman of Silverstein Properties, what would happen if the startup flopped, he said, “Oh graces. I don’t know. WeWork is doing very well. They’re in a number of locations with significant investment in each of those locations. I can’t see any reason why they should go belly up. I hope they don’t.” Indeed, WeWork, which was founded in New York City in 2010, has locations in 83 buildings in 22 cities across seven countries—and will soon grow to 111 buildings in 30 cities across 13 countries. Even though it remains in growth mode—and has even launched its co-living concept WeLive at William Rudin’s 110 Wall Street— how the company will fare through a downturn remains unclear at this point. But assuming that WeWork is on the outs— considering it slashed its profit forecast by 78 percent—might be taking things too far, New York City’s biggest landlords told Commercial Observer. “It’s premature at this point to begin the speculation of WeWork’s demise,” said Joseph Moinian, the president and chief executive officer of the Moinian Group. “It’s safe to say that coworking is here to stay, and WeWork will certainly be competing with a growing pool of similar companies.”

WEWORK IS WEWORKING, IN CONCEPT AT LEAST

YOU CAN ALWAYS GO BACK TO THE OLD-FASHIONED WAY

“The coworking industry is a crucial part of the ecosystem of an entrepreneurial economy, and I am optimistic that this trend will continue,” said Toby Moskovits, the founder and CEO of Heritage Equity Partners. “What will continue to be very interesting is the influence of the coworking culture on traditional office buildings and how owners design, build out and lease their space.” And it’s good for New York, according to K. Thomas Elghanayan, the chairman, CEO and co-founder of TF Cornerstone. “It’s a great alternative for starter companies looking to get their foot in the door in New York City.” Ron Moelis, the CEO of L+M Development Partners, agreed that the concept of coworking is here to stay, even if not in its current manifestation. “With or without WeWork, the concept will live on,” he said. “Creative coworking space is great and is something millennials are excited about.” And Gregg Schenker, the president and co-managing partner of ABS Partners Real Estate, concurred: “if [WeWork] is ahead of its time, a successor will likely follow.”

Jason Muss, the principal of Muss Development, said he’s not sure what will happen, but if it comes down to it, “those subtenants [should] make direct deals with the landlords, who will then have more leases to write and more hand-holding and [tenant improvements] work to deal with.” WeWork’s buildouts do make it difficult to quickly and cheaply repurpose its spaces, noted Nicholas Bienstock, a managing partner at Savanna. That said, the New York market will be resilient because “the denominator of space is so vast that it won’t have much of an effect on the market.” Jeff Levine, the chairman of Douglaston Development, said that if WeWork were to fail as a whole, it could provide investors with the opportunity to buy buildings where the startup had a large footprint and then do a repositioning. At the very worst, “we would be left with a beautiful, all glass, office-intensive installation,” noted David Zar, the principal of Zar Property NY.

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MY FAVORITE OFFICE N

ever has “the office” been more synonymous with home than today. No longer does one miss the pleasures of comfy furniture or ready snacks because of long hours at work, as the modern office itself has been converted into amenity-laden stations, for today’s workforce to feel at ease—like home, with your work family. So we’ve put together our list of some of the best offices, most unique offerings and greatest aesthetics, which should make employees of other firms a bit jealous. Take Alison Brod Marketing + Communications’ 10,000-squarefoot office on the 12th floor at 440 Park Avenue South. The space features an entire fashion showroom with clothes, shoes, cosmetics and fragrances by top brands like Ralph Lauren and L’Oreal, available for use by its 65 employees. And as one would expect, Yelp has vast food offerings. The company (a user-based restaurant reviewing website, for those of you living under a rock) has two cafeterias, a coffee shop, a bar and a snack area, which has an array of cereals, chips, health bars, fruit and nuts at its 11 Madison Avenue digs. —Danielle Balbi and Liam La Guerre

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BEST GAMES AND SNACKS

YELP

Along with its array of food choices we mentioned, Yelp has a game room, which offers two table tennis boards, a foosball table, table hockey, shuffleboard, corn hole and two basketball shootout games.

ALISON BROD Besides its fashion showroom for employees, Alison Brod’s offices also feature a small salon with a hair washing station and two salon chairs, and weekly visits from manicurists and celebrity stylists.

FROM LEFT: EMILY ASSIRAN/COMMERCIAL OBSERVER; KAITLYN FLANNAGAN/COMMERCIAL OBSERVER

BEST FASHION AMENITIES

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BEST FURNISHINGS

NEW LAB

New Lab in Brooklyn has one of the coolest pieces of furniture ever: a sofa made of materials derived from mushrooms. But the innovation doesn’t stop there. There are couches that are fashioned like Tetris blocks (left) and Herman Miller Eames-style chairs that are dotted along communal desks.

BEST VIEW

It’s a serious challenge to get a full New York City skyline, when one happens to be located in the middle of the city. But the view from law firm Polsinelli’s 42nd floor conference room at 600 Third Avenue manages to include the iconic obelisklike 1 World Trade Center Downtown, the classic Art Deco Empire State Building in Midtown South and even One Bryant Park in Midtown.

FROM TOP: EMILY ASSIRAN/COMMERCIAL OBSERVER; MICHAEL ROBINSON

POLSINELLI

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BEST STAIRCASE

MOLLY STROMOSKI/FOR COMMERCIAL OBSERVER

YODLE Marketing firm Yodle gets top efficiency marks for its interconnected staircase that joins floors 17 and 18 at 330 West 34th Street. That staircase doubles as bleacher seating for employees to use while eating lunch, doing tech demos, meetings or presentations. But it also has an 11-foot screen above with a projector system, which has been used for movies, sporting events and video games.

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LORD OF THE LAND: New York City and its mayor, Bill de Blasio, control a vast real estate empire.

Who are the biggest owners who generally have nothing to do with real estate? BY LAUREN ELKIES SCHRAM

W

hen you think of New York City’s biggest landlords, names like Brookfield Asset Management, Vornado Realty Trust and SL Green Realty Corp. naturally come to mind. But when it comes to the city’s biggest real estate player—it is none of the usual suspects. It’s the City of New York, with a whopping 917 properties amassing 183.7 million square feet, according to data from CoStar Group. That square footage is more than five times the amount of space the city’s biggest traditional landlord (as in an entity that has a primary line of business in real estate), Brookfield Asset Management, owns. The other biggest nontraditional property owners (of existing buildings that aren’t owner-occupied) have much smaller portfolios, according to a list compiled by CoStar for Commercial Observer. And while they are disparate, they generally fall into two categories: governments and institutions or sovereign funds. There is Qatar Investment Authority

(QIA), for example, with an investment in 14 properties totaling 10.6 million square feet. And there’s Norwegian Government Pension Fund Global, with 14 properties and 7.9 million square feet; the Trustees of Columbia University in the City of New York with 97 properties and 6.6 million square feet and the Port Authority of New York & New Jersey with 14 sites and 5.7 million square feet. (See chart for the top 15 on page 24.) “I think the real takeaway, is that investors of all kinds continue to find New York commercial real estate more and more appealing given the alternatives,” said Joseph J. Sollazzo, a real estate economist for CoStar. When it comes to the first group, government and institutions, “the goal is to advance the institution so whether it’s a church or a government, they’re not in the business of making money on real estate,” said Barry Hersh, a clinical associate professor at the NYU Schack Institute of Real Estate. “[They have] a different purpose, and real estate is just a way to meet that purpose.”

ANDREW BURTON/GETTY IMAGES

The Non-Landlord Landlords

Unlike the typical real estate companies, these entities focus on whether or not they will need the properties at some point in the future. Or maybe a property has some community, historic of other value that makes its owner reluctant to sell it. “[The] strength [of these organizations] is that they’re forever,” Hersh said. “They want to use their long-term status. They have to be really sure before they sell a property that they will never need it. They can hold them. They don’t pay real estate taxes because they are exempt. [And] they probably don’t have a mortgage.” And while all the players we’re speaking of have some other primary business, you wouldn’t know it if you looked at the big teams involved in managing the real estate in question. Many have in-house executives and decision-making boards, often with highlevel real estate executives. Norges Bank Real Estate Management  had 122 real estate employees all over the world at the end of last year, 19 of them in the New York City office, the company

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SQUARE FOOTAGE

City of New York

917

183,676,987

Qatar Investment Authority

14

10,554,065

Norwegian Government Pension Fund Global

14

7,876,450

Trustees of Columbia University in the City of NY

97

6,567,477

The Port Authority of New York & New Jersey

14

5,738,575

New York University

46

5,686,763

Canada Pension Plan Investment Board

3

3,987,261

Trinity Church Real Estate

13

3,703,093

New York State Office of General Services

4

2,715,893

China Investment Corporation (CIC)

1

2,587,000

Metropolitan Transportation Authority

17

1,503,560

Oxford Properties Group

3

1,348,192

Plaxall

15

722,037

Abyssinian Development Corporation

7

434,612

Mount Sinai Properties

6

12,730

1,171

237,114,695

GRAND TOTAL

MOHAMMED AL-SHAIKH/AFP/GETTY IMAGES

NUMBER OF PROPERTIES

SHEIKH YOUR MONEY MAKER: Crown Prince Sheikh Tamim bin Hamad Al Thani (above) and his Qatari government is now a partial owner of the Empire State Building (below).

SYLVAIN SONNET/GETTY IMAGES

COSTAR’S 15 BIGGEST NON-TRADITIONAL OWNERS

LANDLORD

CHART COVERS NON-TRADITIONAL LANDLORDS AND THE PROPERTIES THEY OWN, BUT DON’T OCCUPY, THAT ARE ALREADY BUILT, EXCLUDING LAND, AS OF SEPT. 29. SOURCE: COSTAR GROUP.

spokeswoman said. Carl Weisbrod, the director of the New York City Department of City Planning and chairman of the New York City Planning Commission, was the president of the real estate division of Trinity Church for five years. (Today, the landlord has 13 properties with 3.7 million square feet, CoStar indicates.) At the Port Authority, Patrick Foye, the current executive director, was the president of Empire State Development Corporation under Eliot Spitzer. And until May, Scott Rechler, the chief executive officer and chairman of RXR Realty, was vice chairman, the highest-ranking New York appointee. (See the sidebar on the Port Authority on page 26.) At New York University (which owns 46 properties and 5.7 million square feet), alumnus Larry Silverstein of Silverstein Properties serves as an honorary vice chair of the school’s board of trustees.  For out-of-town funds, they generally want someone on the ground in the local market, Hersh said. Oxford Properties Group, which is owned by the Ontario Municipal Employees Retirement System, has partnered with Related Companies at Hudson Yards. (Oxford has a stake in three existing properties, amounting to 13.5 million square feet, CoStar determined.) It’s not exactly a surprise that the City of New York would be the biggest of all the non-landlord landlords. “The city probably got a lot of their property through tax foreclosures, people

The city is impossible to deal with because it’s too bureaucratic. Deals take years and you have to have so many people provide input and sign off.

not paying property taxes in the 1970s,” said Robert Knakal, the chairman of New York investment sales at Cushman & Wakefield. Added Hersh, “The city acquired properties when it did in rem [when property owners fail to pay taxes and the city takes legal action to gain title to the sites]. Today the city doesn’t do that. It sells the tax lien. They make a much better return on their investment.” But just because they’re the biggest, doesn’t mean they’re the most sought after. Two investment sales brokers CO talked to who requested anonymity said that when it comes to dealing with city or state real estate, there are so many layers of bureaucracy and deals take forever. “The city is impossible to deal with because it’s too bureaucratic,” one of the brokers said. “Deals take years and you have to have so many people provide input and sign off. It’s painfully slow and you have administration changes. As soon as the administration changes you start from scratch again.” Then there is the second group of nontraditional landlords, comprised of sovereign funds, which resemble traditional real estate investors. “They are investing to make money and in fact to some degree are competing with insurance companies and banks and developers,” Hersh said. “Sometimes they’re partnering with them. [They have] the same goal.” QIA is the second-biggest nontraditional landlord on CoStar’s list due to

an acquisition of a 9.9 percent interest in Empire State Realty Trust, through a $622 million investment this summer. Norway’s fund is No. 3 on the list. A 2010 mandate from the Ministry of Finance called for the fund to invest up to 5 percent in real estate, according to a spokeswoman for Norges Bank Real Estate Management, which manages the fund. What is evident from the list of the city’s biggest nontraditional landlords is that international funds are investing in New York City real estate. Other entities with holdings include the Canada Pension Plan Investment Board (with three properties amounting to 4 million square feet) and China Investment Corporation (with one property, the 2.6-million-square-foot 1 New York Plaza). “I think the regularity with which you find the sovereign wealth funds on this list is further evidence of international investors coming to New York,” Sollazzo said. “Many institutional investors, both domestic and foreign, have been increasing their exposure to real estate as an asset class in recent years, which makes perfect sense given the low-yield environment we currently find ourselves in. And if you look at the economic outlook for the U.S. compared to other parts of the developed world, it looks good, providing favorable growth prospects, and typically, safety from global turmoil.” With additional reporting provided by Terence Cullen.

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Mission Creep After years as one of the biggest landlords in New York City, the Port Authority is going back to its roots BY TERENCE CULLEN

T

his is a story about how a transportation agency became one of New York City’s largest nontraditional landlords, and how it is trying to revert back to its original mission. The Port Authority of New York & New Jersey was founded by the states of New York and New Jersey in 1921 to manage New York Harbor along with the bridges and tunnels that cross the Hudson River. But in the 1960s it inherited the bankrupt subway that ran between the two states known

today as the PATH train. So it turned to real estate as a revenue source to subsidize the floundering system. “There were times when they saw themselves as an industrial development agency,” said Barry Hersch, a clinical associate professor at the NYU Schack Institute of Real Estate. “They did the World Trade Center. Would they do that today? Probably not.” Now, the agency has 5.4 million square feet of commercial space, according to an analysis by CoStar Group for Commercial Observer. But the Port Authority is trying to shed that development image after years of construction missteps. Port Authority Executive Director Patrick Foye told CO in July that the agency had dumped $1.5 billion worth of nonessential real estate over the last three years. The bi-state agency is exploring selling off more properties such as its teleport on Staten Island and its majority stake in 1 World Trade Center. “There are others we are looking at currently,” he said. Its controlling share of 1 WTC isn’t going anywhere just yet, however. Port Authority Chairman John Degnan told Politico New York in September that while selling the 3-millionsquare-foot building is a long-term option, the agency wasn’t going to sell it anytime soon. Other holdings across the boroughs include the 454,000-square-foot Bathgate Industrial Complex in the Bronx. The Port Authority became

increasingly involved in these industrial and office types of properties in Staten Island and Elizabeth, N.J., according to Jameson Doig, a professor at Princeton University who has authored a book on the organization. “I suppose they could be called real estate ventures, though they were focused on job creation,” he said in an email. The Port Authority’s real estate endeavors began in earnest under New York Gov. Nelson Rockefeller, who successfully steered the Port Authority to develop the original World Trade Center in the late 1960s (the Twin Towers opened in 1973). By the mid-1970s, the city was going bankrupt, and companies were leaving New York, said Nicole Gelinas, a senior fellow at the Manhattan Institute, a conservative-leaning think tank. “This was their original sin back in the 1960s,” Gelinas said of the Port Authority’s entrance into the real estate game. “They kind of lost sight of what they were supposed to be doing.” Gelinas added that the World Trade Center didn’t become profitable to the agency until the 1980s, but the Port didn’t sell the leasehold on the complex to a private developer until 2001— six weeks before the Twin Towers were destroyed on 9/11. Rebuilding the complex put the Port Authority $4 billion in debt, Gelinas said, noting that that was a major reason why the agency has begun selling its pure real estate assets. With additional reporting provided by Lauren Elkies Schram.

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Q &A

Landlords opine on everything from WeWork to a hotel glut to ‘Hamilton’ ILLUSTRATION PORTFOLIO BY JOHANNA GOODMAN

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Q&A

Nicholas Bienstock MANAGING PARTNER SAVANNA What project currently under development will most transform New York City? (And why?) The development of the Far West Side. It is already shifting the gravity of New York westward.    Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? When you spin a globe and put your finger down anywhere—the world seems more unstable and dangerous than at any point in my lifetime. Pick a spot: the Middle East, China, Japan, Russia, Europe—everywhere is either in crisis, prolonged lingering malaise, economic retrenchment, actual war or political turmoil. In this fractured world, the United States is the tallest midget in the room. We have our problems, but our problems are nothing compared to everyone else’s problems. In the past when Savanna has met with international real estate investors, they have always said they invest first in London and then New York. As we move into years of uncertain negotiations around Brexit, I don’t think London is first anymore.  That probably elevates New York to the most attractive city for international real estate investment.    Has the hotel bubble already popped, and what does that mean for hospitality? We don’t invest in hotels, but it feels like some air is coming out of the tires.    What’s the plan (or should be the plan) if WeWork goes belly up? In New York it will leave vacancy in a few buildings, but the denominator of space is so vast that it won’t have much of an effect on the market. Those buildings will need to re-lease the vacated space, which will be expensive since WeWork’s buildout is specific to their use and is not broadly reusable by other tenants. If you were going to get in on the ground floor in any market, where would you go? We like to invest in the deepest and most liquid markets and have focused on New York City. So, in addition to investing in Manhattan, “ground floor” for us means investing selectively in the most exciting emerging submarkets in New York. But we don’t want to be pioneers.  We want others to be pioneers, and we want to invest once there is a critical mass and when the trends are clear. For that reason, we like

sections of Downtown Brooklyn and Long Island City. They are submarkets in the heart of the deepest and most liquid market in the world, with tremendous access to public transportation, but also benefit from being in the midst of transformative investments on an extraordinary scale from multiple institutional investors.   If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Some assets are highly political and are lightning rods for controversy. We try to stay away from controversy. If we owned those assets, we would operate them as “white knights,” operating carefully and responsibly within regulatory guidelines and improving them over time.   How would you like to reform LEED, WiredScore and StarEnergy? We work hard to upgrade the systems of our buildings to make them more energy efficient. Wherever feasible, we shoot for LEED certification.  Large, sophisticated tenants care, and that kind of focus on making greener buildings increasingly makes a positive difference as we lease our properties.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? We have always been lenders and debt investors, as well as equity investors. We continue to lend on a selective basis when we like an asset, a business plan and sponsorship. The best lenders for developers of complex projects are those that really understand the business. That is because you can count on the fact that things will often not go as planned, and the borrower on a complex repositioning or development deal will need to work with the lender through various anticipated and unanticipated changes. A lender that really understands the development side of the business is in a far better position to work constructively with the borrower, rather than just point to the documents and say “no” because the documents don’t anticipate the situation. So I would argue that a borrower who is financing a significant development [or] redevelopment project is better off working with a lender that has that expertise in-house.

Looking to the 2017 election, what should the next mayor do to help NYC? The next mayor should focus on both making sure that the streets are safe and address the increasingly visible issues of homelessness in the heart of primary commercial districts. I recently saw a semi-permanent cardboard shanty built on Fifth  Avenue in the 40s. Homeless people appeared to be living behind the cardboard. The problems of homelessness are serious and need to be addressed. But the city should not permit semi-permanent shanty’s to be built on the streets in the heart of the city’s commercial districts. That is bad for New York in every way.   If you weren’t in real estate, what would you do? Write fiction, badly.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor House of Cards or Game of Thrones? Game of Thrones Hillary or Donald? Can you give me another option please? Mission Chinese or Jean-Georges? JG Empire State Building or 1 World Trade Center? ESB. Classic. Iconic. The New York Times or The New York Post? Post. And WSJ. South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Both Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Old fashioned Buy, sell or hold? Buy or sell—that is the pro and con of being in the real estate fund business

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Q&A

John Catsimatidis CHAIRMAN AND CHIEF EXECUTIVE OFFICER RED APPLE GROUP AND UNITED METRO ENERGY CORPORATION

What project currently under development will most transform New York City? (And why?) I am excited about one of my projects that will transform the quality of life in Coney Island while improving real estate values and economic development in that community. I want to create a beautiful Coney Island boardwalk with my property that will resemble a skyline and shoreline like Miami Beach. This will attract middle-class and upscale residents who will be making a long-term commitment to Coney Island. It will attract outside tourists who spend money, thus creating job opportunities. (Hopefully, we do not encounter any impediments from the City of New York— in which case I would look to move forward with some pending out-of-state alternative investments, instead.) Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? New York City will remain the financial “capital of the world”—but it needs to work to maintain this rank. Great Britain is a great U.S. ally. At this point, it needs to convince investors it is not going to allow its politics and influence to be overtaken by outsiders. I would wait and see on any London investing, until the post-Brexit scenario plays out. Who’s to blame for the 421a debacle? Government, including New York State and New York City for not effectively encouraging investors to make a commitment. For example, I am now starting to significantly invest in St. Petersburg, Fla., real estate. Real estate developers will become more aggressive in seeking alternative regions where more government incentives are being offered. Has the hotel bubble already popped, and

what does that mean for hospitality? I am not sure it has popped—but people cannot continue to spend crazy numbers and expect to receive crazy numbers! There are just so many $2,000-per-night rooms needed. More hotel and motel investment is needed for the middleclass market rather than the emperor level. What’s the plan (or should be the plan) if WeWork goes belly up? There maybe a little pain, aggravation and inconvenience. However, real estate developers are resourceful enough to see an opportunity to service the needs of this sector. Someone with imagination and vision will create new options. If there is a true market here, someone will fulfill it. If you were going to get in on the ground floor in any market, where would you go? I am exploring ideas and concepts in Queens and the Bronx, which can only go up in value through development, especially in the Bronx, where a lot of transit is already in place. Development usually follows transit. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would make a slow financing transition building-bybuilding, trying not to hurt or disrupt anyone already there. How would you like to reform LEED, WiredScore and StarEnergy? These certification “excellence” programs are worthy initiatives. But they must be compatible with builders, developers and real estate interests. The challenge is to make their standards financially attainable so that their end goals do not make the properties (and the people living and working in them) unaffordable, with liabilities. And

accomplishment of these standards must yield a proven economic value. Looking to the 2017 election, what should the next mayor do to help NYC? The next mayor must be able to build the confidence of builders, developers and real estate interests to invest. The next mayor needs to have credibility and trust with this sector. If you weren’t in real estate, what would you do? I would be an entrepreneur in projects with the ports of New York—which is one of the most vital economic assets our region possesses.

LIGHTNING ROUND: Kanye or Taylor Swift? I don’t follow them House of Cards or Game of Thrones? I have some interest in both Hillary or Donald? I know both of them quite well Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? I read both South Shore or Jersey Shore South Shore, especially Coney Island with its potential for a great comeback iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? I don’t drink! Buy, sell or hold? Buy—at the right price!

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Portrait by renowned illustrator Joseph Adolphe.

WILMINGTON TRUST RENOWNED INSIGHT

“You’ve built a strong team for your business. Have you done the same at home?”

Thomas C. Rogerson Senior Managing Director and Family Wealth Strategist Tom is a recognized leader and pioneer in family governance, assisting families with communication, philanthropic vision, legacy planning, succession, and education. He incorporates these critical issues into a client’s comprehensive wealth management plan, helping not only to prepare the money for the family, but also to prepare the family for the money. For access to knowledgeable professionals like Tom and the rest of our team, contact Sharon Klein at 212-415-0547.

As a business owner, you likely spend time promoting a sense of teamwork, collaboration, and unity among your employees. But are you doing the same within your family? Establishing a strong sense of team at home is crucial if you hope to pass on your business to future generations. The dilemma. Parents in highnet-worth families face the challenge of preparing the next generation to tackle wealth-related issues, while also worrying about entitlement and lack of motivation. They often spend a great deal of time preparing their money for their family, but rarely focus on preparing their family for the money. Many business owners who come to us have fallen into this trap. We see them devoting significant resources to off-site company retreats, where abilities and shared values are identified, and the company’s mission for the future is discussed at length. But when asked if they are doing the same with their families, there’s likely silence and a shrug. Interdependence is often overlooked. By the time you realize that your family is fragmenting into a group of independent, self-interested

individuals, it can be very difficult to reverse the trend. The answer. We have a five-step process that can help you build a strong family team, and it’s based on some of the same tools you’d use within your company. It involves education, communication, shared values, philanthropy, and governance. The tools and strategies employed at each stage can help families start encouraging the skills needed to make positive, intelligent decisions regarding family wealth long into the future.

90% OF HIGH-NET-WORTH FAMILIES LOSE THEIR WEALTH BY THE THIRD GENERATION Source: The Williams Group Wealth Consultancy

Wilmington Trust has extensive experience helping successful business owners and their families develop critical communication skills and build family unity. For insight into how we can help you create your own “home team advantage,” visit wilmingtontrust.com/nextgen.

F I D U C I A R Y S E R V I C E S | W E A LT H P L A N N I N G | I N V E S T M E N T M A N A G E M E N T | P R I VAT E B A N K I N G

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of your professional advisor should be sought. Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services. Investments: • Are NOT FDIC-Insured • Have NO Bank Guarantee • May Lose Value Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation (M&T). Investment management and fiduciary services are provided by Wilmington Trust Company, operating in Delaware only, and Wilmington Trust, N.A., a national bank. Loans, retail and business deposits, and other personal and business banking services and products are offered by M&T Bank, member FDIC. ©2016 Wilmington Trust Corporation and its affiliates. All rights reserved.

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10/5/16 3:31 PM


Q&A

Isaac Chera PRINCIPAL CROWN ACQUISITIONS What project currently under development will most transform New York City? (And why?) The World Trade Center site. It will bring a new sense of vibrancy to Downtown that has been lost for a very long time. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Yes…foreign capital is seeking stability that London once shared with New York—and is no longer a contender. Has the hotel bubble already popped, and what does that mean for hospitality? Tourism is down… If you were going to get in on the ground floor in any market, where would you go? Chinatown in Manhattan, Flushing, Queens and Sunset Park, Brooklyn. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Cycles have seen this before...It doesn’t last very long. We are not lending [and] have not borrowed from a developer...[but we] would if terms were acceptable. Looking to the 2017 election, what should the next mayor do to help NYC? Quality of life issues—which have declined slightly during this administration. If you weren’t in real estate, what would you do? Real estate.

LIGHTNING ROUND: Kanye or Taylor Swift? TS House of Cards or Game of Thrones? House of Cards Mission Chinese or Jean-Georges? JG Empire State Building or 1 World Trade Center? 1 WTC The New York Times or The New York Post? Post South Shore or Jersey Shore? Jersey Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? All three!

Quality of life issues [are most important for the next mayor], which have declined slightly during this administration.

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25

YEARS OF

RELATIONSHIPS

FIRST

Since 1991, Meridian has closed more loans with more lenders for more borrowers than any other broker on earth.

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Q&A

Ric Clark SENIOR MANAGING PARTNER AND CHAIRMAN BROOKFIELD PROPERTY PARTNERS What project currently under development will most transform New York City? (And why?) Between Brookfield’s Manhattan West, the Hudson Yards and several smaller projects in the area, there is a dynamic, new city coming together on Manhattan’s West Side. With good transportation, cutting-edge technologies, the world’s most innovative thinking in sustainability and design, great public spaces, abundant retail shops and amenities, and fantastic views, there will be a new definition of what a modern, world-class, mixed-use community can be, not just for New York but for the world.   Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? There will certainly be investors that will redirect capital to New York because of the uncertainty Brexit brings, but we remain high on London. Brookfield is already London’s largest commercial landlord, and we are looking to do more there, as we are in New York.    Who’s to blame for the 421a debacle? If the time and energy spent on positioning around this question were spent on avoiding it, New York City would have more affordable housing units and more construction jobs. There are no winners.   Has the hotel bubble already popped, and what does that mean for hospitality? Given existing supply and development underway, some hotels will be under pressure. But the right hotels in the right New York City neighborhoods will be fine.

What’s the plan (or should be the plan) if WeWork goes belly up? The generation driving the world’s economy today works differently than its predecessors. Smart landlords are making adjustments to help employers attract, retain and motivate that workforce. Coworking entities are addressing this, and WeWork has certainly been a dynamic, global leader in this area. Could there be growing pains along the way? Sure, but coworking is not going away.   If you were going to get in on the ground floor in any market, where would you go? Berlin is an exciting, high-energy market driven by creative and technology tenants. We recently acquired— and are now repositioning—Potsdamer Platz, built in the 1980s on the site of the former Berlin Wall. I like this market.   If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? A great asset and a better question for its new owner.   How would you like to reform LEED, WiredScore and StarEnergy? We could not be more focused on ensuring our properties remain at the forefront of sustainability and technology. Any successful owner today needs to be. We care about how our properties are rated of course but it’s best to let the raters focus on how to convey the most accurate information market-wide.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Brookfield is in the business.

Hard to beat a developer’s understanding of the underlying collateral. We have no issue borrowing from developer lenders. Looking to the 2017 election, what should the next mayor do to help NYC? Create programs and incentives to stimulate investment in New York City’s future: education, infrastructure, housing…    If you weren’t in real estate, what would you do? No idea.

LIGHTNING ROUND: Kanye or Taylor Swift? Kanye House of Cards or Game of Thrones? Thrones Hillary or Donald? Pass Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? I’m a downtowner—1 WTC The New York Times or The New York Post? Post then Times. South Shore or Jersey Shore? Tough one. South Shore is growing on me. iPhone or Android? iPhone Uber or yellow cab? Uber, even if they weren’t a tenant Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Old fashioned Buy, sell or hold? A bit of each

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Q&A

Charles S. Cohen PRESIDENT AND CHIEF EXECUTIVE OFFICER COHEN BROTHERS REALTY CORPORATION What project currently under development will most transform New York City? (And why?) Hudson Yards. It creates an entire new mixeduse community in an area of New York that’s been fallow for decades. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I’m a big fan of London, but it’s real estate tax laws aren’t as favorable as here. Brexit has helped solidify New York City as the world’s leading financial center. Who’s to blame for the 421a debacle? Our elected officials, who should start figuring out how to team up to serve the best interests of our city and state. Has the hotel bubble already popped, and what does that mean for hospitality? The loss of major hotel properties through residential conversions has helped pop the bubble. The city needs more grand hotels rather than boutique ones. What’s the plan (or should be the plan) if WeWork goes belly up? I don’t think WeWork is in danger of going belly up. It serves a very important segment of the tenant market. If you were going to get in on the ground floor in any market, where would you go? South Florida and Southern California. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Keep it as a rental and invest heavily in its infrastructure. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? I think it’s very risky. I’m not a big fan of this trend. Looking to the 2017 election, what should the next mayor do to help NYC? Reinforce what makes New York great, improve our infrastructure and our traffic flow.

The loss of major hotel properties through residential conversions has helped pop the [hotel] bubble. The city needs more grand hotels rather than boutique ones.

If you weren’t in real estate, what would you do? Already doing it—active in both real and intellectual properties.

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Q&A

Tommy Craig SENIOR MANAGING DIRECTOR HINES What project currently under development will most transform New York City? (And why?) One Vanderbilt, with its direct connection to Grand Central Terminal, open space at grade and aspirational architecture, will have a catalytic effect on transforming Midtown Manhattan into the 21st century. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Brexit is a symptom of those forces around the world resisting further globalization. That will not help New York in the near term. As for London, the English have 1,000 years of history as a nation state with a long and distinguished commitment to liberty and self-rule. They are of but not in Europe and will, like Switzerland, present an alternative to the European political project whose reform is long overdue. So now is a good time from a relative value perspective to go long on London with the right capital structure. Who’s to blame for the 421a debacle? There appears to be more than enough blame to be shared by many parties.

with less debt as shared and flexible workspace is a winning idea. If you were going to get in on the ground floor in any market, where would you go? I think there will be good mixed-use infill projects with access to public transportation in New York City’s close-in suburbs. These developments will take advantage of the millennials’ cohort as their children require better quality schools—something New York City has not successfully addressed yet. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Respect its heritage as a model for well-designed middleclass housing but find a better way than rent control and rent stabilization to maintain its affordability to middle-class families. How would you like to reform LEED, WiredScore and StarEnergy? I would make LEED a more dynamic system that reduces the emphasis on tabulating points (which leads to a lot of copycat strategies) and allows a larger subjective score for innovative initiatives.

Has the hotel bubble already popped, and what does that mean for hospitality? More than anything else, New York’s 60 million tourists a year have helped offset job losses in the financial services sector. The combination of new supply and new platforms, such as Airbnb.com, may limit future opportunities in the hotel sector.

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? SL Green has had great success in this space. Hines as a global firm is focusing its long-term growth around having expertise in all the major sectors—office, residential, retail, etc.

What’s the plan (or should be the plan) if WeWork goes belly up? Hopefully, to reorganize

Looking to the 2017 election, what should the next mayor do to help NYC? If the next mayor

could help roll back Dodd-Frank so that the finance sector was better than a regulated utility, the country would have better capital formation. With better capital formation, New York City might (dare we wish) put momentum back into infrastructure spending so we could rely less on the visionary planning of the 19th century and more on our own actions in the 21st century. If you weren’t in real estate, what would you do? I would miss [being in real estate]—it’s too late to change now, though.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Hillary or Donald? Welcome the challenge to the status quo—time for a third party Mission Chinese or Jean-Georges? Neither Empire State Building or 1 World Trade Center? 1 WTC The New York Times or The New York Post? WSJ South Shore or Jersey Shore? Neither iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Neither Buy, sell or hold? Hold

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Q&A

Douglas Durst CHAIRMAN THE DURST ORGANIZATION What project currently under development will most transform New York City? (And why?) The World Trade Center site. The connections have all been made, and while there is still work going on at the site, the master plan has been realized, and it is more successful than imagined. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? In the short term, there will be some capital flight to New York from London. But in general, Brexit is bad for Britain, Europe and the world—and that means it is bad for New York City as well. Who’s to blame for the 421a debacle? Ultimately, it is New York City’s property tax system that is responsible for the 421a debacle. Property taxes on rental housing in New York City are 30 percent of gross revenue, about three times higher than other cities. The taxes make the development of rental housing cost prohibitive, and therefore we need 421a to not just create affordable housing but to build rental housing. If the tax system was fixed, we wouldn’t need 421a. Has the hotel bubble already popped, and what does that mean for hospitality? The concept of your tenants checking out each morning terrifies me. I like to stay in hotels, not own them.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? We tried and got outbid by a couple billion dollars. Sometimes losing is winning. How would you like to reform LEED, WiredScore and StarEnergy? These national standards are frequently problematic for urban builders, long-term owners and skyscraper developers. We get too much credit for our proximity to public transportation; often buildings are judged on how they perform day one and not over the life of the project and large buildings with lots of people in them doing energy intensive jobs (like trading) are penalized. The standards are helpful for those who are new to sustainable development, but for us they are not always useful. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? We haven’t gotten there yet, but we have started acquiring debt as a means to acquisition.

What’s the plan (or should be the plan) if WeWork goes belly up? Doubtful, but people and companies can rent directly from landlords in a worst-case scenario.

Looking to the 2017 election, what should the next mayor do to help NYC? We need to realign our property tax system to encourage the type of housing we want built. We subsidize low-density single-family homes in affluent neighborhoods at the expense of large multifamily rentals in developing neighborhoods. For a city whose growth is pivotal to its success, it is madness.

If you were going to get in on the ground floor in any market, where would you go? The 1970s.

If you weren’t in real estate, what would you do? I’d be a spokesmodel.

LIGHTNING ROUND: Kanye or Taylor Swift? Who? House of Cards or Game of Thrones? I prefer bridge Hillary or Donald? We would be thrilled to have Donald rejoin the ranks of New York City developers after the election. Of course, he would actually need to build a building. Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? One World Trade Center The New York Times or The New York Post? I read them all with equitable frustration South Shore or Jersey Shore? I haven’t been to either since I was a kid. I like to spend my weekends composting. iPhone or Android? Android Uber or yellow cab? If I want to get somewhere fast I take the subway Hamilton or Book of Mormon? Hamilton Martini or old fashioned? I like martinis without vermouth Buy, sell or hold? Hold

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10/5/16 3:04 PM


Q&A

Justin Elghanayan PRESIDENT ROCKROSE DEVELOPMENT What project currently under development will most transform New York City? (And why?) Hudson Yards will completely transform West Midtown within the next two years and will create Manhattan’s most exciting new neighborhood. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? London hasn’t been a focus of investment for us. If financial tenants decide to relocate their headquarters to New York, we’ll be ready. Who’s to blame for the 421a debacle? Political relationships and the number of construction projects started last year before the last 421a expired have delayed serious negotiations between the parties. Has the hotel bubble already popped, and what does that mean for hospitality? Cycles will come and go, but I think the long-term outlook for hospitality in New York City is very bright. What’s the plan (or should be the plan) if WeWork goes belly up? The demand for commercial space in New York City for the near term, and the long term is clear. If you were going to get in on the ground floor in any market, where would you go? Getting in before everyone else has been Rockrose’s specialty for 45 years. If you were to take over Stuy Town / Peter Cooper Village, what would you do with it? Upgrade the buildings to Rockrose standards and improve the quality of life for existing tenants. How would you like to reform LEED, WiredScore

and StarEnergy? Programs such as LEED need to be evaluated to determine whether they result in reduced energy use and smaller carbon footprints, or whether they are more of a marketing tool. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? We haven’t had the need to utilize any developer-turned-lenders and haven’t considered doing so ourselves. Looking to the 2017 election, what should the next mayor do to help NYC? Ensure that New York City’s economy and cultural vitality continue to attract the best and brightest, and that we have the housing to accommodate all New Yorkers. If you weren’t in real estate, what would you do? Probably public interest work.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? The New York Times South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Book of Mormon Martini or old fashioned? Martini Buy, sell or hold? Hold

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David Seelinger CEO EmpireCLS

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10/5/16 3:05 PM


Q&A

K. Thomas Elghanayan CHAIRMAN, CHIEF EXECUTIVE OFFICER AND CO-FOUNDER TF CORNERSTONE What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turnedlender? Would you? I think it’s an interesting concept—we’re planning to lend and have looked into a few deals. What’s challenging is that developers are wary of doing this type of business with other developers because they think that the lender is just interested in “loaning to own,” which is far from the truth. We want to use our expertise in the industry to make smart judgment calls as to the economic viability of a project. I think you’ll see more of these transactions as the market gets tighter. And we haven’t borrowed.

What project currently under development will most transform New York City? (And why?) Our project at 606 West 57th Street is currently one of the largest residential buildings rising in the city. As long-term investors in the Far West Side of Manhattan—we completed 455 West 37th Street over eight years ago—we’ve been able to experience the evolution of the area firsthand, and buildings like 606 West 57th and Durst’s Via 57 West will transform not only the skyline but the retail landscape. These buildings will meet the demand for modern apartments in the neighborhood and set the standard for residential buildings. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? From a competitive, relative perspective, New York has been enhanced by Brexit, as will [be] Paris, Brussels and other financial centers in Europe. We have no plans to invest in London. Who’s to blame for the 421a debacle? I don’t think we should play the blame game. What’s most important is that we do what’s best for our city and its residents. The issue is, if there’s no incentive program, then it’s impossible to build any affordable housing moving forward. In New York City, the real estate tax on an apartment building is around 33 percent of the gross rent. Just to put this into perspective, in the next highest city—Boston—it lingers around 10 percent. If a developer is paying 33 percent out of the gate, it’s impossible to profit and therefore a challenge to produce new housing. Has the hotel bubble already popped, and what does that mean for hospitality? I don’t think the hotel bubble has necessarily popped; however, Airbnb has definitely had a negative impact on the industry as a whole, as millennials, Gen X and other frequent travelers are looking for more affordable options. This has led to quite an oversupply of hotel rooms. What’s the plan (or should be the plan) if WeWork goes belly up? I don’t foresee WeWork going belly up in the near future. It’s a viable business model, and it’s a great alternative for starter companies

Looking to the 2017 election, what should the next mayor do to help NYC? Be fiscally responsible so that the city is able to operate on a very strong financial footing. looking to get their foot in the door in New York City. Ultimately, it’s been beneficial to our economy and a good thing for New York City. If you were going to get in on the ground floor in any market, where would you go? Outside of New York. There are a lot of depressed downtown areas that are ripe for development. TFC has always thrived on pioneering new neighborhoods and there are a lot of opportunities to do this in a variety of areas across the country. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would’ve sold it to the residents and turned it into a condo. I also would introduce vital retail and amenities to the open spaces. How would you like to reform LEED, WiredScore and StarEnergy? TFC always strives to meet the requirements for these types of certifications, especially in our new developments. However, these programs ideally would offer more costsaving subsidies to developers—as of right now, the payback period is so long that there’s no incentive to partake.

If you weren’t in real estate, what would you do? I’d probably be involved in some sort of financial/ private equity business.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? New York Times South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Hold

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10/5/16 3:14 PM


Q&A

Hillary or Donald? L

ast year, when the primary season hadn’t officially started but CNN was airing a lot of debates, Commercial Observer asked 33 owners the open-ended question: “Who would you like to be the next president of the 2015 Hillary Clinton: 12 percent Donald Trump: 6 percent United States?” Mike Bloomberg: 6 percent Bush: 3 percent The Jeb result (as we sort of expected) was Marco Rubio: 3 percent No response/preference: 67 percent largely evasive. 2016 Hillary Clinton: 37 percent Donald Trump: 8 percent respondents Twenty-two said they Mike Bloomberg: 2.6 percent Neither: 18 percent were still mulling the candidates, or didn’t No response: 34 percent answer—67 percent of those polled. Four (12 percent) responded with one of the names of the Republicans (or what we deemed a GOPfriendly answer). And two (6 percent) said that they hoped Michael Bloomberg would throw his 2015 hat in the ring. Hillary Clinton: 12 percent Donaldof Trump: 6 percent But in 2016 a surprising number owners Mike Bloomberg: 6 percent Bush: 3 percent were willing to stand up and be Jeb counted Marco Rubio: 3 percent for No response/preference: 67 percent 2016 Hillary Clinton. She garnered support from 37 Hillary Clinton: 37 percent Donald Trump: 8 percent percent of the 38 owners polled—including from Mike Bloomberg: 2.6 percent 18 percent an owner who last year was backingNeither: Marco Rubio No response: 34 percent and another who had expressed a preference for Jeb Bush. Donald Trump got a meager 8 percent (three—one of whom was Trump’s son-in-law, Jared Kushner, CO’s publisher), and

2016

HILLARY CLINTON

DONALD TRUMP

MIKE BLOOMBERG

2015

NEITHER

NO RESPONSE

JEB BUSH

MARCO RUBIO

one respondent (2.6 percent of the tally) is still holding out hope for Mayor Mike. It’s true, 34 percent of those we polled didn’t answer the question. Another 18 percent expressed a preference for neither one and often followed it with some damning words about both candidates, or the political system. Moreover, it’s likely that Trump’s 8 percent number is a little soft; a handful of the people in this survey are right-leaning who have donated to conservative candidates in the past and are simply trying to avoid saying anything that could screw up their relationships with current or future business partners. By the same token, Clinton’s support is a little soft, too. The Federal Election Commission has a pretty user-friendly website that can show you exactly who has donated to which campaign, and Clinton has gotten a lot of checks from people in the real estate business who chose not to answer this question. But, based on what we’re seeing here, if the election were strictly amongst landlords and owners, Clinton would be the next president of the United States by a landslide. —Max Gross

FROM LEFT: MELINA MARA/THE WASHINGTON POST VIA GETTY IMAGES; SPENCER PLATT/GETTY IMAGES

37% 8% 46 • OWNERS MAGAZINE • 2016

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10/5/16 2:56 PM


Q&A

Ziel Feldman CHAIRMAN AND FOUNDER HFZ CAPITAL GROUP What project currently under development will most transform New York City? (And why?) Seventy-six 11th Avenue—the only 900,000square-foot full-block development site in West Chelsea, flanked by the High Line and the Hudson River. Currently under construction as a “neighborhood within a neighborhood,” it will feature all the offerings of a mixed-use development including restaurants, retail and a five-star hotel, while maintaining a level of intimacy that can sometimes be lost on a largerscale project. The Eleventh, as we’ve named the project, features two soaring towers between the High Line and Hudson River designed by awardwinning architecture firm, BIG (Bjarke Ingels Group). Connected by a podium, a series of bridges, gardens and a motor court, the towers will be the tallest buildings in West Chelsea at approximately 300 and 400 feet tall and feature 360-degree expansive views. In addition to bringing a visionary five-star hotel to Downtown Manhattan, The Eleventh offers a new strata of residential product to Downtown, with an unprecedented combination of location, architecture, interior design, views, services and lifestyle. Additionally, one of the project’s most exciting aspects is a partnership with Friends of the High Line, which is collaborating with us on a public open-air pedestrian promenade on the site that will run adjacent to the High Line. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? In the short term New York has already benefitted as London is currently not as attractive to invest in on a risk reward basis.

There is a flight to “safety” taking place, and that plays very favorably for the U.S. and New York City real estate in particular. Who’s to blame for the 421a debacle? Cyclical political winds. Has the hotel bubble already popped, and what does that mean for hospitality? New room absorption especially at the three-star level will take 18 to 24 months to be absorbed, which will drive RevPAR down. However, there is not an over supply of five-star product Downtown, for example, where we are building The Eleventh. Reverse should happen afterwards. If you were going to get in on the ground floor in any market, where would you go? Manhattan in 1994, 2009; Detroit and Philadelphia two years ago. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? It would depend on the price. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? It can be opportune in the right scenario and potentially extremely profitable.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Mission Chinese or Jean-Georges? Jean Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? The New York Post South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or The Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Buy and sell

Looking to the 2017 election, what should the next mayor do to help NYC? Reinforce brokenwindow policing policies and reinvigorate friendly business regulations. If you weren’t in real estate, what would you do? Lower my golf handicap.

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Q&A

Ken Fisher PARTNER FISHER BROTHERS What project currently under development will most transform New York City? (And why?) The World Trade Center, with its new office towers, iconic transportation hub, parks and shopping has completely transformed Lower Manhattan. In addition to its tremendous symbolic significance, the rebuilding has helped create a far more dynamic and vibrant Downtown. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? The Brexit deal won’t hurt New York City, but I’m not so sure how much it helps. That is yet to be determined. I personally wouldn’t rule out investing in London. Like anywhere else, if the deal makes sense, I go. Who’s to blame for the 421a debacle? There’s plenty of blame to go around, but at the end of the day it all comes down to economics. You can devise a plan around any number of parameters, but if the numbers don’t pencil out for developers, then nothing is getting built. You aren’t going to do a deal that is likely to lose money, no matter how civic-minded you are. Has the hotel bubble already popped, and what does that mean for hospitality? Fisher Brothers is focused primarily on office and residential, so I’m not the foremost authority on the hotel market. I will say that all of the hotel development you’ve seen recently is an absolute testament to the city’s unrivaled popularity as a tourist and business destination. What’s the plan (or should be the plan) if WeWork goes belly up? WeWork deserves a lot of credit for pioneering the coworking concept, and I admire what they have built. I’m not making any predictions about their future, but hypothetically, if a major space user like WeWork disappeared tomorrow, it would throw a whole lot of space on the market at an already uncertain time. That said, this market certainly has proved its resiliency time and again—most recently in 2008, when it withstood the rapidfire losses of Bear Stearns and Lehman Brothers.

If you were going to get in on the ground floor in any market, where would you go? That’s easy. New York City. There’s no other town like it. How would you like to reform LEED, WiredScore and StarEnergy? I will give these programs credit for raising the bar. LEED, in particular, really forced owners to consider and ultimately embrace the concept of sustainability. At this stage, however, we really need to toughen the criteria. The top designations should be reserved for those who truly go above and beyond. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? We like it. We’ve been lending in a modest way for a number of years, and we’re currently looking at opportunities to expand smartly. We haven’t borrowed from another developer to date, but we’d consider it if the numbers worked. Looking to the 2017 election, what should the next mayor do to help NYC? Every mayor’s first duty is to promote New York City as a fantastic place to work, live and play. We’re the epicenter of just about everything—business, culture, tourism, media, you name it. We need to continue spreading the word, and that starts with the mayor.

If you weren’t in real estate, what would you do? Well, “Run for president” has already been taken…I would devote my energies full time to my work with Fisher House, the Intrepid and the other foundations that already take up a big chunk of my time. As much as I love the work we do at Fisher Brothers, nothing is more rewarding to me than seeing the positive impact we have on people’s lives, especially America’s current soldiers and veterans and their families.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? House of Cards Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? Empire State Building South Shore or Jersey Shore? South Shore (that’s where I live) iPhone or Android? iPhone Hamilton or Book of Mormon? Book of Mormon Buy, sell or hold? Hold

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Q&A

Ira Z. Fishman CHIEF EXECUTIVE OFFICER EVO REAL ESTATE GROUP What project currently under development will most transform New York City? (And why?) Clearly, Hudson Yards is the most important development in the last 50 years. This development will transform the city as we now know it. It is essentially creating an entire new neighborhood of office and residential buildings, parks and boulevards. These buildings will be the buildings of the future, built to meet the needs of the tenants of the future.

If you were going to get in on the ground floor in any market, where would you go? The question is, Where and what is the ground floor? Twenty to 25 years ago it was clear that Midtown West and the Printing District were beginning to attract office tenants for the first time. In retrospect, that was the ground floor for those markets. I believe Hudson Yards is at the ground floor stage now.

Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I do not think there will be a significant effect on the Manhattan real estate market. I prefer to invest close to home.

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I think people should stay with what they know. Leave lending to the banks, the funds and Wall Street.

Has the hotel bubble already popped, and what does that mean for hospitality? New York City continues to attract international and domestic visitors at record numbers. I believe the hospitality industry will continue to thrive long term.

Looking to the 2017 election, what should the next mayor do to help NYC? There are two major issues facing the city as I see it: terrorism and the growing homeless population. The mayor needs to work in partnership with Albany and the federal government to address these issues.

What’s the plan (or should be the plan) if WeWork goes belly up? I do not see a long-term plan if WeWork goes belly up. It will be up to the individual owners to find replacement tenants.

If you weren’t in real estate, what would you do? Not sure. I wasn’t sure what I was going to do when I graduated college, and I wouldn’t be sure now.

LIGHTNING ROUND: Hillary or Donald? Hillary Empire State Building or 1 World Trade Center? The Empire State Building The New York Times or The New York Post? New York Times South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? I don’t drink Buy, sell or hold? Definitely hold

Clearly, Hudson Yards is the most important development in the last 50 years.

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Scott Galin PARTNER AND PRESIDENT AND CHIEF EXECUTIVE OFFICER HANDLER REAL ESTATE ORGANIZATION What project currently under development will most transform New York City? (And why?) Hudson Yards, upon completion, will become the most significant project in my lifetime, while One Vanderbilt will stand at the epicenter of the East Side rezoning. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? At this stage, it’s far too early to determine the midor long-term effects. Brexit is a complex scenario with multiple elements that still need to play out. We (meaning Handler) have several interests in European real estate funds that include trophy assets in the U.K. We continue to feel positive about these investments, and despite any potential short-term disruptions from Brexit, we anticipate that, longer term, London will stand among the world’s strongest real estate markets. Has the hotel bubble popped, and what does that mean for hospitality? Hotels are location-centric, but RevPAR and ADRs are both down, so there appears to be a trend indicating the hotel market is entering the soft side of the cycle. If you were going to get in on the ground floor in any market, where would you go? I’ll be happy to share that information once we lock up the best properties there! How would you like to reform LEED, WiredScore and StarEnergy? LEED served its purpose, especially in its early days, raising the level of conversation about social responsibility in real estate, when there was greater overall reluctance to accept that buildings can (and should be) run as efficiently as possible, within economic and logistical reason. Today, the market now demands a much higher baseline level of efficiency than ever before, so I’m not sure that LEED means as much as it once did. Tenants today

are equally, if not more, focused on connectivity, so as a property owner it will be very difficult to attract tenants, and especially into the future, if buildings don’t make the necessary investments to provide that infrastructure. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I’ve seen much more of this lately. We have not borrowed from a developer-lender, but we have been part of lending groups on select occasions. Lending is a subspecialty that requires its own level of expertise.

Looking to the 2017 election, what should the next mayor do to help NYC? The next mayor needs to continue to be vigilant in regards to crime and safety, which I consider to be New York City’s number one issue. I would also like to see a healthy relationship with the governor and MTA, working in unison to complete the ongoing improvements and additions in mass transit, developments and infrastructure, such as the Second Avenue subway, LaGuardia Airport expansion and others. If you weren’t in real estate, what would you do? Teach.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones?
 House of Cards Hillary or Donald? Hillary Clinton Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? Hmmm … both The New York Times or The New York Post? NY Times in the a.m., NY Post in the p.m. South Shore or Jersey Shore? South Beach iPhone or Android? iPhone Uber or yellow cab?
Both Hamilton or Book of Mormon?
Both Martini or old fashioned? Chivas 18 Buy, sell or hold? Property specific

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Q&A

What if….

Do developers have a life (even a fantasy life) outside of real estate?

PHOTO ILLUSTRATION BY KAITLYN FLANNAGAN/ COMMERCIAL OBSERVER; PHOTOS VIA GETTY IMAGES

TOP CHEF: Jared Kushner’s (right) fantasy career is chef. Robert Lapidus (top left) would go into rock. Marc Holliday would breed horses.

N

ot to get too Inside the Actors Studio on our owners, but one of the questions we felt compelled to ask was, “If you weren’t in real estate, what would you do?” Unlike the Manichean either/or of our lightning round, or the analytical questions about 421a and WeWork, each response suggests something deeper (and more personal) about our owners. Suddenly, there are all sorts of fates that could have been. We get a glimpse at who Nicholas Bienstock of Savanna and Jeff Levine of Douglaston Development are when they go home at night (writer and rabbi, respectively). Each fantasy life promises to be completely different from their real life. Or so we thought. Not that it should come as such a surprise, but the most common what-if fantasy for these men and women was real estate. (So much for indulging in fantasy.)

“Never thought about it,” said Richard LeFrak of LeFrak. “Being a developer is my whole life.” “I would miss [it],” replied Tommy Craig of Hines. “It’s too late to change now, though.” “Well, since I’ve only been at it for 60 years, it’s hard for me to think of any alternative,” said Silverstein Properties’ Larry Silverstein. “Real estate,” answered Isaac Chera of Crown Acquisitions, simply. We’re glad there are at least no regrets. But there were a few owners who let us in on their life beyond just brick and mortar. “I’d be a spokesmodel,” said Douglas Durst of the Durst Organization. (We thought he was kidding, but when we asked a representative if his boss really wanted to be a supermodel, the reply was, “Spokesmodel. It’s different.”) “I would train thoroughbred horses,” Marc Holliday of SL Green Realty Corp. told CO. “Apart from my role at SL Green, I am a horse owner,

breeder and a big fan of racing.” Holliday is not the only horse owner amongst the landlords. “I own a couple of racetracks and horse farms,” said Jeffrey Gural of Newmark Grubb Knight Frank, “but my first love was really construction. I have a degree in civil engineering, and if I wasn’t in real estate, I would be in construction.” Both Robert Lapidus of L&L Holding Company and David Zar of Zar Property NY would go into the rock-and-roll business. Some of these owners are already active in a second life. Charles A. Cohen, for instance, is an extremely successful movie producer (his film Hitchcock/Truffaut was screened at Cannes last year). And apparently Jared Kushner’s second life as a publisher (of CO and the Observer) and political insider is not all there is—when Kushner was asked the question he responded, “Chef.” —Max Gross

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Q&A

MaryAnne Gilmartin PRESIDENT AND CHIEF EXECUTIVE OFFICER FOREST CITY RATNER COMPANIES What project currently under development will most transform New York City? (And why?) Rikers Island, while not currently under development but under study by the Lippman Commission, could be the most transformative place-making initiative of this decade. An ominous dreaded facility set upon 410 acres of land, the site has tremendous potential for generating economic value for the city, the state and the region. It promises to be one of the most provocative and promising land use discussions in recent history.

it’s not the only game in town. It may be on the brink of becoming a commoditized product in a space that demands authenticity. That just means that others will cannibalize its market share, not that the business concept is flawed. The office market today is fundamentally different. There’s a creative community across many industries looking for places to work in a flexible and collaborative way. In the untethered, innovation economy, the coworking model has a lasting place (both boom and bust times) in New York City’s real estate market.

Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I’m making the ultimate investment in London—my son just started his freshman year studying there. The impact of Brexit on the global economy remains unclear. The market dreads uncertainty, and that is the near-term challenge with understanding Brexit’s impacts. No matter, London is a 21st century, global city and will remain such. Also, the U.K. will continue to prosper and people from around the globe will continue to look at London as a place in which to invest and live. I do think New York will benefit from London’s short-term crisis of confidence and come out ahead. But in my view, New York was always the front-runner anyway.

If you were going to get in on the ground floor in any market, where would you go? New York City is expensive but still the strongest, most resilient U.S. market, generating the highest quality income and returns available to investors. We are witnesses of a broad, farreaching, urban renaissance that holds promise for places like Detroit and Pittsburgh along with other formerly industrial cities. I think interest in cities with access to transportation and a wide range of diverse activities will continue. It is where people want to be.

Who’s to blame for the 421a debacle? I know better than to comment on that! Has the hotel bubble already popped, and what does that mean for hospitality? I don’t think it has popped. I think there are some readjustments that will take place. Increased supply will impact ADRs, but the city remains a magnet for tourism and business travel. As such, the hotel sector will continue to be a major economic driver for our city. What’s the plan (or should be the plan) if WeWork goes belly up? WeWork is the most disruptive thing that has happened in real estate in a generation. I think there’s a market for the WeWork model, and

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? We have to protect the affordable part of Stuy Town/ Peter Cooper Village. I applaud the city for its work in that area. But we could also look at redevelopment in a way that allows for greater density and affordability. It would be a political hot potato, but it could be an extraordinary project that could create newer, cleaner housing, open space and true mixed-income housing. How would you like to reform LEED, WiredScore and StarEnergy? For us, it is not about reforming them. It is about building to the greatest sustainable level possible. Scorecards don’t substitute for intention. It’s the substance of the sustainability that matters. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender?

Would you? It is driven by a quest for yield, and I am not sure it is sustainable. We don’t plan on lending or borrowing from a developer-lender because a developer’s motivations are different than a bank’s. Looking to the 2017 election, what should the next mayor do to help NYC? Continued focus on quality of life and safety. A safe and livable city drives a healthy real estate market. If you weren’t in real estate, what would you do? I am admittedly a hopeless developer. That said, I could see myself doing many other things— running a start up, investing in new ideas, teaching and writing—all at once.

LIGHTNING ROUND: Kanye or Taylor Swift? Kanye because I have teenage boys who love him House of Cards or Game of Thrones? Hopelessly addicted to HOC Hillary or Donald? Really? Mission Chinese or Jean-Georges? Love both Empire State Building or 1 World Trade Center? An icon is an icon—nothing beats the ESB. It allowed 1 WTC to exist! The New York Times or The New York Post? NYT: Gray Lady rules South Shore or Jersey Shore? How about the North Fork? iPhone or Android? And BlackBerry! Proud user of iPhone, iPad Pro and BlackBerry—talk, read docs and email—all simultaneously. Uber or yellow cab? Uber (except in London) Hamilton or Book of Mormon? Must be in the room where it happens! Martini or old fashioned? Martini Buy, sell or hold? Depends upon the asset, the location and the moment

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Q&A

Francis Greenburger CHAIRMAN AND CHIEF EXECUTIVE OFFICER TIME EQUITIES What project currently under development will most transform New York City? (And why?) I think the World Trade Center, West Street retail and Battery Park developments will have the most impact on this city. They’re at the forefront of transforming Downtown from a business community to a high-end mixeduse destination, supported by an amazing transportation infrastructure. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? The Post-Brexit era has not yet begun and chances are, the impact will be less jarring than people think. London is a great city, and if competitive returns can be found, I would certainly be a confident buyer about London’s future.   Who’s to blame for the 421a debacle? Aggressive union wage expectations. Has the hotel bubble already popped, and what does that mean for hospitality? While the hotel bubble hasn’t necessarily popped, tourism is certainly off because of the currency valuations making New York City more expensive for most travelers and increased competition from apartment rentals.   What’s the plan (or should be the plan) if WeWork goes belly up?  We don’t have any exposure to WeWork but clearly demand for this kind of coworking space is real, even if WeWork’s

current financial model does not work. If you were going to get in on the ground floor in any market, where would you go? Markets that are fundamentally sound but going through cyclical times would be most appealing to me. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? It should be converted to condominium ownership.   How would you like to reform LEED, WiredScore and StarEnergy? Narrow the scope of their requirements so more people are inclined to buy in.   What do you think about developers getting into the lending game? Are you lending? I don’t have a lender mentality, as it’s a much different business from owning property. And no, I am not lending. Have you borrowed from a developer-turnedlender? Would you? No.   Looking to the 2017 election, what should the next mayor do to help NYC?  I’d like to see the next mayor set more realistic rent-regulation policies and stop raising real estate taxes.   If you weren’t in real estate, what would you do?  I’d probably get involved with other types of investing while pursuing my socialpreneurship passions in art, education and criminal justice reform.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones?  House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges?  Jean-Georges Empire State Building or 1 World Trade Center?  1 World Trade Center The New York Times or The New York Post?  The New York Times South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton Martini or old fashioned?  Neither—I only drink wine Buy, sell or hold? Depends on what, where, when and how much. For the most part, I like to hold.

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Q&A

Jeffrey Gural CHAIRMAN NEWMARK GRUBB KNIGHT FRANK What project currently under development will most transform New York City? (And why?) Hudson Yards is a spectacular project. When you tie it in with the High Line and the view of the river, I just think it’s magnificent. There will be a lot of residential there also—all of this development really takes the West Side and makes it a very viable location. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? The thing that New York has going for it is stability. Brexit caught everyone off guard, but it only helps New York. At my age, I’m not really interested in investing in foreign countries. I’ve learned that it’s best to stick to what you know, which for me is the tri-state region. Who’s to blame for the 421a debacle? There is plenty of blame to go around, and it’s hard to pick one person. I’m not in the residential development business, but I think affordable housing is very important, and I think it’s in everyone’s best interest that they resolve this issue as soon as possible. Has the hotel bubble already popped, and what does that mean for hospitality? I’m not really in that business but I do worry that Airbnb is a threat, and in general I see so many hotels being built. We’ve owned real estate in the Garment District forever, and I remember when there were streets that you would be afraid to walk down—West 39th between Eighth and Ninth Avenues, for example—and now there are around six hotels on that block. It’s amazing to me how many hotels have gone up. Like anything else it comes down to supply and demand, and when you’re throwing Airbnb into the mix—it’s certainly not a business that I would want to be in right now. What’s the plan (or should be the plan) if WeWork goes belly up? I have no idea! Every time I visit a WeWork facility, it looks very busy, but on the other hand we haven’t gone through a recession yet. It’s certainly possible that when you have a business expand as quickly as they have, they

may suffer if we hit a downturn in the economy. But I don’t have them as a tenant anywhere. If you were going to get in on the ground floor in any market, where would you go? I still think there is opportunity in Long Island City and also in Jersey City. We own some property in Jersey City. The PATH train is just like the subway and residential rents are half of what they are in New York. So, I wouldn’t say it’s the “ground floor,” but at the end of the day, there’s a limit to what people can pay in rent. My son and my nephew have bought some properties in Long Island City, which is three stops away on the subway, and one of my sons lives in Red Hook— it’s really challenged because of transportation, but again it’s a great area and there are beautiful views of the Statue of Liberty. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? That’s not my area of expertise. I’ll leave it to those who know what they’re doing when it comes to that, but it’s a prime piece of real estate. How would you like to reform LEED, WiredScore and StarEnergy? My nephew handles that for me. At my age, I’m just happy when I turn the light switch on and the lights go on! Having said that, President Obama said something last week that should concern all of us—that it’s an absolute certainty in 20 years that South Beach will be underwater, and we can expect Superstorm Sandy-type events as a common occurrence. So that really does concern me. How many Superstorm Sandys do we want to go through? A lot of New York is on the waterfront. If the president is correct, that is something that we really have to address here. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? No, I haven’t. We aren’t in that game. Looking to the 2017 election, what should the next mayor do to help NYC? We have to continue to address the income-inequality issue, and

try to create as much affordable housing as possible. We also have to make sure that the police department continues to do a terrific job. [Former Police Commissioner] Bill Bratton was terrific, and there’s nothing more important than people feeling safe. We have to continue to improve race relations, but by and large I think New York is a melting point, so I think it’s something we do a pretty good job at. If you weren’t in real estate, what would you do? I own a couple of racetracks and horse farms, but my first love was really construction. I have a degree in civil engineering, and if I wasn’t in real estate, I would be in construction.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? New York Times South Shore or Jersey Shore? Jersey Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton, I’ve seen it twice—great show Martini or old fashioned? Old fashioned Buy, sell or hold? Hold

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Q&A

Marc Holliday CHIEF EXECUTIVE OFFICER SL GREEN REALTY CORP. One Vanderbilt, which is in the earliest stages of construction, will be the catalyst for the resurgence of the area. Already we are fielding calls every week from world-class companies and their representatives who are planning ahead and want to be part of what is destined to be a remarkable transformation. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Given the longstanding cross-Atlantic rivalry between London and New York City as the world’s leading financial centers, it’s only natural that any disruption for one will likely benefit the other. So, yes, New York stands to gain. But London should come out fine and will still be a compelling investment play compared to some of the financial centers on the European continent. The extent will be dependent on the details of Brexit that are still not clear. That said, New York City is our sole focus at SL Green, and we have no current plans to invest in London. What project currently under development will most transform New York City? (And why?) While the Hudson Yards and World Trade Center projects are certainly noteworthy, we have chosen to stake our claim at Grand Central with the One Vanderbilt project. The potential strategic location value of Grand Central Terminal is incredible, and yet for many years this submarket was overlooked as its office stock failed to keep up with the rest of the city.

If you were going to get in on the ground floor in any market, where would you go? New York City. Of course, we’re already here, and it’s our 100 percent focus as we continue to take advantage of the best market opportunities. We simply don’t know of any other market that’s stronger, deeper and shows more growth potential.

Would you? Debt investment is great for those who know what they are doing—and could be treacherous for those who don’t. We have been involved in the debt business for nearly 20 years. Over that time we have developed an unsurpassed franchise specializing in debt and preferred equity investments that takes advantage of our deep knowledge of the New York market. SL Green has emerged as the lender of choice for many real estate owners with whom we have long-standing relationships. Looking to the 2017 election, what should the next mayor do to help NYC? Peel back unnecessary regulations, which seem to be proliferating at an alarming rate, along with overly burdensome corporate taxes. If you weren’t in real estate, what would you do? I would train thoroughbred horses. Apart from my role at SL Green, I am a horse owner, breeder and a big fan of racing.

LIGHTNING ROUND: South Shore or Jersey Shore? South Shore Buy, sell or hold? All of the above. Always.

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender?

We have chosen to stake our claim at Grand Central with the One Vanderbilt project. The potential strategic location value of Grand Central Terminal is incredible.

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Q&A

Jonathan Iger CHIEF EXECUTIVE OFFICER WILLIAM KAUFMAN ORGANIZATION/ SAGE REALTY CORPORATION What project currently under development will most transform New York City? (And why?) Hudson Yards. Between the master planning behind it and the underlying technology, it’s truly going to be the world’s first “smart city” within a city. Related and their strategic partners are going to be able to track everything from waste usage to greywater runoff to energy demand—you name it. Once complete, it’s going to teach us how to build better buildings. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? A lot of it depends on what happens with Scotland and Northern Ireland and whether they secede from the United Kingdom. If that plays out, the effect on trade is going to be devastating, and that will have an enormous impact on London’s economy. At the same time, this can only help New York. Uncertainty in the U.K. may drive foreign investors to the perceived safety of New York City real estate. Outside of New York City, London is one of three or four stable international cities where there’s a flight to safety for capital, but for some investors, they might not view London as safe any longer, particularly for investors with longer-term outlooks. Has the hotel bubble already popped, and what does that mean for hospitality? I don’t believe we’re in a bubble. New York City’s record tourism numbers are only continuing to increase, and growing neighborhoods like Hudson Yards and Lower Manhattan are going to require additional hospitality to address the changing demographics in those areas. Some of the challenges that hotels have to deal with relate to how they respond to the increase in supply from new hotels plus the shadow inventory supplied by Airbnb as well as to how they go about creating a unique experience that distinguishes their product from the competition. This

couldn’t be more in line with commercial real estate today. The boutique hotels today create synergies between their communal public spaces, restaurants and hotel rooms, which enhances the overall experience for the guest.  Through our amenity spaces, renovated common areas and lobbies, and other shared hospitality-type services, we strive to create a similar unique experience for our tenants. What’s the plan (or should be the plan) if WeWork goes belly up? I don’t see the core concept of WeWork going away. I can’t speak directly to their growth strategy, but what they’ve done is popularized the coworking space model, which is here to stay. In fact, WKO recently launched a short-form leasing program at 767 Third Avenue that provides space users of various sizes with shorter lease term options, flexible floor plans and full access to all shared building amenities and workspaces. Our goal is to bridge the transition from coworking to a traditional office environment. I plan to roll it out across our entire portfolio. If you were going to get in on the ground floor in any market, where would you go? Right here in New York City. My family’s been in the Manhattan real estate market since post-World War II. We are long-term investors and longterm holders. That’s our core competency. There is no better market. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would engage residents and the community at large by hosting events and bringing in retail pop-ups, similar to what we do with our plazas and our office buildings. There’s a great workforce down there, but it needs a sense of community.

the importance of WiredScore and programs like LEED and EnergyStar, but I don’t believe that you need to pay for a score to be defined by that. We offer the same level of connectivity and telecom services that these organizations use to create the score without paying to be certified. We make all the information about building specifications available on our website. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Developers understand the market and the requirements of other developers better than any other lender, and overall, I think it’s a good thing. WKO is not currently lending, but I do see the upside in it. I have not borrowed from a developer-turned-lender because it doesn’t fit in with our portfolio strategy. We currently manage six buildings totaling 3 million square feet of core/core-plus assets in Manhattan, and we are borrowing from commercial banks or insurance companies. Looking to the 2017 election, what should the next mayor do to help NYC? Reinstate 421a, expand the Midtown East rezoning plan and reduce regulation across the board. If you weren’t in real estate, what would you do? I’d be a tech investor.

LIGHTNING ROUND: House of Cards or Game of Thrones? Game of Thrones South Shore or Jersey Shore? Jersey Shore

How would you like to reform LEED, WiredScore and StarEnergy? I understand and agree with

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Q&A

Buy, Sell, Hold? SELL

HOLD

2.6%

50%

BUY

2.6% NO ANSWER

11% BUY AND SELL

5% BUY AND HOLD

2.6%

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O

ne of the great things about putting out a magazine like this one is the chance it affords us to lick our thumb and put it up to the wind. What do 38 of the most active and intelligent players in the real estate market think about the future? Are they buying? Are they selling? Are they holding? A year ago, the hunger to buy was palpable. One couldn’t see some of the big sales in the city—from the Crown Building for $1.78 billion to Stuyvesant Town-Peter Cooper Village for $5.45 billion—and not recognize that a lot of the big players in real estate were taking a stab

at the shiniest prizes while the getting was good. Does that still ring true in 2016? Not really. The mood has definitely gotten less exuberant. Of course, this comes with a lot of caveats. When asked about his buy/sell/hold position Marc Holliday of SL Green Realty Corp. probably said it most succinctly when he answered, “All of the above. Always.” Fair enough. We understand that each situation is different. And many of his fellow owners echoed something similar (26 percent answered some variation on buy, sell and hold). Five percent said buy and sell, and 2.6 percent said buy and hold.

BUY, SELL AND HOLD

26%

But for those who wanted to shuck off the nuance the message was clear: hold. Nineteen out of the 38 owners surveyed (50 percent) are holding. One is looking to buy (2.6 percent) and one is looking to sell (2.6 percent). Of course, the real estate market has been red hot for an extremely long time, and it stands to reason that it’s time to cool down. And the owners we spoke to were a fairly philosophical bunch, with few people freaking out too much over global surprises like Brexit. Nonetheless, readers should take note of the writing on the wall. It’s not “buy” anymore. “Definitely hold,” as Evo Real Estate Group’s Ira Fishman put it.—Max Gross

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Q&A

Steve Kaufman PRESIDENT THE KAUFMAN ORGANIZATION What project currently under development will most transform New York City? (And why?) Hudson Yards: A whole new city is being built on the West Side of Manhattan (close to a number of existing Kaufman Organization properties). With the extension of the 7 subway line and the amount of retail and residential coming up, this is a transformative project for that part of the city. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I agree that New York will come out ahead and don’t see a significant effect on New York City’s commercial real estate market. Has the hotel bubble already popped, and what does that mean for hospitality? From casual observation as someone who walks around the city, due to the huge number of upcoming hotels, I wouldn’t be surprised if the bubble has popped. What’s the plan (or should be the plan) if WeWork goes belly up? There’s plenty of room for expansion in the coworking area, as the percentage of office space that’s being used for this area is still relatively small.

If you were going to get in on the ground floor in any market, where would you go? The Bronx, which is the only area that would have ground floor at this point; certain sections are showing signs of gentrification. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Keep it as a middle-class housing enclave in Manhattan— which we need more of. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Kaufman has not borrowed from a developer-turned-lender, though would consider if it was a competitive deal. Kaufman is not considering getting into the business ourselves. Looking to the 2017 election, what should the next mayor do to help NYC? Lower real estate taxes (but that won’t happen)…

LIGHTNING ROUND: Kanye or Taylor Swift? Neither House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? The New York Times South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Use both, no preference Hamilton or Book of Mormon? They’re both great Martini or old fashioned? Martini, extra dry Buy, sell or hold? Hold

If you weren’t in real estate, what would you do? Be Bruce Springsteen.

The Bronx [is] the only area that would have a ground floor at this point; certain sections are showing signs of gentrification.

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Q&A

David Kramer PRESIDENT HUDSON COMPANIES What project currently under development will most transform New York City? Second Avenue subway and the BQX Connector.

and StarEnergy? Don’t know, but I will say that there’s going to be a lot more Passive House in our future.

Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I never leave the five boroughs, but post-Brexit, it figures that more international money will flow into New York City over London.

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? We’re not in the lending game, but we’re talking to a few. I think it makes a lot of sense—developers who are strong underwriters will make good lenders.

Who’s to blame for the 421a debacle? Albany, obviously. If you were going to get in on the ground floor in any market, where would you go? Southern Brooklyn, Queens along the 7 train and South Bronx. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I wouldn’t change much; it’s the perfect market rental. How would you like to reform LEED, WiredScore

Looking to the 2017 election, what should the next mayor do to help NYC? Mayor de Blasio will be reelected, and he should keep doing what he’s been doing—working to improve [the New York City Department of Buildings], investing in housing, investing in long-term infrastructure improvements like the BQX, keep crime down and try his best in Albany. If you weren’t in real estate, what would you do? Broadway producer. 

LIGHTNING ROUND: Kanye or Taylor Swift? TS House of Cards or Game of Thrones? BoJack Horseman Hillary or Donald? Hill Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? ESB The New York Times or The New York Post? NYT South Shore or Jersey Shore? Berkshires iPhone or Android? BlackBerry Uber or yellow cab? Tie Hamilton or Book of Mormon? BOM Martini or old fashioned? Wheat beer Buy, sell or hold? Tricky

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Q&A

Jared Kushner CHIEF EXECUTIVE OFFICER KUSHNER COMPANIES

What project currently under development will most transform New York City? (And why?) The Watchtower properties. The project will provide the best opportunity for creative companies in New York City and set a new standard for office space.  Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? New York City will come out ahead as a safe place to invest capital. London will be fine in the long run.   Who’s to blame for the 421a debacle? Politics.   Has the hotel bubble already popped, and what does that mean for hospitality? Tourism in New York City will continue to increase over the long run, so I’m bullish.   What’s the plan (or should be the plan) if WeWork goes belly up? Self-operating locations.  If you were going to get in on the ground floor in

any market, where would you go? New York City. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Own it for a very long time.   How would you like to reform LEED, WiredScore and StarEnergy? Anything that gets us on a path toward more sustainable buildings.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from  a  developer-turned-lender? Would you? Yes, [I lend] and yes, it’s smart. Owners have a good sense for the risk that comes with lending.    Looking to the 2017 election, what should the next mayor do to help NYC? Make it easier to build so both office and housing demand can be met.   If you weren’t in real estate, what would you do? Chef.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Hillary or Donald? Family first Mission Chinese or Jean-Georges? Second Avenue Deli Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? Post South Shore or Jersey Shore? Jersey Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Old fashioned Buy, sell or hold? Hold

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Q&A

Much Ado About Nothing?

York’s benefit when investors are looking at where they want to park their real estate money? Norman Sturner, the president and CEO at MHP Real Estate Services, channeled Wayne’s World to tell CO his opinion of the vote’s outcome: “London was supposed to compete [with the] NYSE...Not!” Indeed, the uncertainty regarding the U.K.’s future may have put a slight damper on London’s appeal or clout as a financial center, much as the British weather ruins plans for summer picnics. However, it also may have given New York a leg up. “As we move into years of uncertain negotiations around Brexit, I don’t think London is first anymore. That probably elevates New York to the most attractive city for international real estate investment,” said Nicholas Bienstock, a managing partner at Savanna. Jeffrey Gural, the chairman at Newmark Grubb Knight Frank, agreed. “It only helps New York,” he said. “I’m a big fan of London,” admitted Charles A. Cohen, the president and CEO of Cohen Brothers Realty, but “Brexit has helped solidify New York City as the world’s leading financial center.” For others, sticking to what you know will just always be more appealing. “I prefer to invest close to home,” mused Ira Fishman, the CEO of EVO Real Estate Group.

NYC’s top owners parse the Brexit vote… and find not much to worry about

LONDON’S NOT BURNING Many of the owners with whom CO spoke remain committed to London and future investments across the pond. “I personally wouldn’t rule out investing in London,” offered Ken Fisher, a partner at Fisher Brothers, while Ric Clark, a senior managing partner and the chairman of Brookfield Property Partners— London’s largest commercial landlord, and a big New York City player—asserted that “[Brookfield] remains high on London.” Robert Lapidus, the president and CEO of L&L Holding Company, reasoned that London is a gateway city and “long term, it will remain one of the best cities to invest in.” Jared Kushner, the CEO at Kushner Companies (and the publisher of CO), concurred, saying that “London

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hen the U.K. voted to bid adieu to the EU on June 23, stocks plummeted, the British pound took a harsh public flogging and stiff upper lips quivered. Doomsday naysayers foresaw London’s impending demise from an investment standpoint, while others predicted the Big Apple would appear extra shiny and tempting to foreign capital seeking a safer haven in the storm. But was it all a dream? A few days later, the market’s horrified roar had softened to the gentle bleating of an English lamb. So, was Brexit, in the words of the Bard, much ado about nothing? We asked some of New York City’s biggest owners to opine. First off, wait, wait...Wait! “Brexit hasn’t happened, and more importantly, the terms of a Brexit haven’t even been proposed, let alone negotiated,” said Dan Rashin, a co-president and the chief executive officer at Rockefeller Group. Good point, although, as Commercial Observer’s Owners Magazine was going to press, Theresa May announced that she would invoke Article 50, the catalyst for a formal EU separation, by March 2017. So, these negotiations will begin shortly.

HAVE VOLATILITY, WILL TRAVEL will be fine in the long run.” Others haven’t set foot in Queen Elizabeth’s kingdom quite yet but aren’t dissuaded by Brexit. “We don’t have any plans to [invest in London], but never say never,” said Joseph Moinian, the president and CEO of The Moinian Group. Furthermore, some applauded the controversial vote. “I admire the courage of the people of England to stand up for what is best,” said Gregg Schenker, the president and a co-managing partner at ABS Partners Real Estate. And for others still, the Big Smoke continues to draw dollars for more personal reasons. “I’m making the ultimate investment in London—my son just started his freshman year studying there,” said MaryAnne Gilmartin, the president and CEO of Forest City Ratner Companies.

NEW YORK, NEW YORK! IT’S A WONDERFUL TOWN! But will the Brexit vote redound to New

As we move into years of uncertain negotiations around Brexit, I don’t think London is first anymore.

Not so fast though. Surely an event such as Brexit with international reach in its consequences can’t be all good news for New York—can it? “In general, Brexit is bad for Britain, Europe and the world— and that means it is bad for New York City as well,” said Douglas Durst, the chairman of Durst Organization. Larry Silverstein, the chairman of Silverstein Properties, pointed out that “uncertainty doesn’t work well for anybody. That’s my concern.” Jonathan Iger, the CEO of William Kaufman Organization, is keeping a close eye on Scotland and Northern Ireland’s threatened departure from the U.K. “If that plays out, the effect on trade is going to be devastating,” Iger said.

CHEER UP, CHAPS! We’ll leave you with soothing words from Francis Greenburger of Time Equities, who was in London on the day the Brexit outcome was announced and still isn’t worried. “The post-Brexit era has not yet begun and, chances are, the impact will be less jarring than people think,” he counseled. —Cathy Cunningham

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Q&A

Robert Lapidus PRESIDENT AND CHIEF INVESTMENT OFFICER L&L HOLDING COMPANY What project currently under development will most transform New York City? (And why?) 425 Park Avenue, which will be the first new blockfront office building on Park Avenue in almost 50 years. It will redefine the trophy office property in New York. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London?  There will be a temporary influx of capital to New York City, but London is a global gateway city, and long term, it will remain one of the best cities to invest in.    Has the hotel bubble already popped, and what does that mean for hospitality? There is a near term oversupply of hotel rooms, which has been exacerbated by Airbnb, but they will all get absorbed over time.    What’s the plan (or should be the plan) if WeWork goes belly up?  Of course, there is potential for risk when you are obligated on long-term leases and your income stream is based upon shortterm tenancies, but the coworking concept is here to stay. There are sophisticated investors behind WeWork, and our exposure to them is minimal.   If you were going to get in on the ground floor in any market, where would you go? New York City. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would maintain it as multifamily housing and improve the buildings gradually over time.   How would you like to reform LEED, WiredScore and StarEnergy? I’m not enough of an expert to say how, or even if, these individual programs should be reformed. We are actually working to achieve a new standard—the WELL Building designation—at 425 Park Avenue. The WELL

system takes sustainability to a whole new level because it requires steps to improve the overall health, wellbeing and productivity of the tower’s future residents. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you?  We are not currently lending, but we would consider it. I think it’s a very smart place for developers to go; the returns are good, and if a problem arises, they can take over the project.    Looking to the 2017 election, what should the next mayor do to help New York City? The next mayor should continue the quality of life initiatives started by Giuliani and Bloomberg.   If you weren’t in real estate, what would you do? I would most likely work in the music business as an agent, promoter or venue operator.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? NY Post South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Tequila Buy, sell or hold? Hold

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Q&A

Richard LeFrak CHAIRMAN AND CHIEF EXECUTIVE OFFICER LEFRAK What project currently under development will most transform New York City? (And why?) Hudson Yards. It brings major commercial activity further west and south in the city. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? People are overestimating its negative impact. It won’t make a difference to New York. The strength or weakness of the pound will be the key to London investments. Who’s to blame for the 421a debacle? Politics is 100 percent to blame. Has the hotel bubble already popped, and what does that mean for hospitality? It’s popping right now, which means more competition and lower returns. What’s the plan (or should be the plan) if WeWork goes belly up? There’s nothing to stop spaceusers from creating their own WeWork culture. If you were going to get in on the ground floor in any market, where would you go? New York, LA, Seattle and Miami. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Keep it as a rental property. That was my plan when I bid on it. How would you like to reform LEED, WiredScore and StarEnergy? Change its criteria. Make it more amenable. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turnedlender? Would you? I borrow conservative first mortgages from institutional lenders. That’s it! Looking to the 2017 election, what should the next mayor do to help NYC? Be more business-friendly. If you weren’t in real estate, what would you do? Never thought about it. Being a developer is my whole life.

LIGHTNING ROUND: Mission Chinese or Jean-Georges? Jean-Georges Buy, sell or hold? Hold

I borrow conservative first mortgages from institutional lenders. That’s it!

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Q&A

Jeff Levine CHAIRMAN DOUGLASTON DEVELOPMENT What project currently under development will most transform New York City? (And why?) I cannot point to one specific project; however, I do think that one of the most transformative initiatives has been the reexamination of our waterfront here in the city. There has been a major push to reimagine these once manufacturing zones; they were long vacant and inaccessible but are now being rezoned for a different use. It has been extremely transformative watching new residential and public areas come to life from Long Island City to Greenpoint to our master development in Williamsburg. I am very proud of our Edge master development site in Williamsburg, as it has activated and completely transformed the community from an industrial park to an active and vibrant destination residential community with ferry landing, public pier, park and retail. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? The immediate effect of Brexit is the softening of the pound sterling, which will bode well for tourism and hospitality, and we hope it will benefit our soon-to-be completed hotel, The Curtain in Shoreditch. Brexit may benefit the New York City metro area because it will be seen as a safe harbor for investors. Who’s to blame for the 421a  debacle? It is very clear that this has turned into a debacle. Elected officials are hesitant to change the underlying residential tax structure; assigning blame is not the solution for us at this time. There needs to be a consensus to come up with a program that adjusts or restructures taxation on new developments to where a tax incentive like 421a is not needed. Currently, the underlying tax code does not support new development, and that has to change if we want to continue to build housing for New Yorkers of all income brackets. Has the hotel bubble already popped, and what does that mean for hospitality? There is no question that both leisure and business travel are economy dependent. There is also no question that the economy has and continues to have an anemic recovery. The effect of this, coupled with progressive agenda that is increasing the cost of

operations through increased health care and wage costs, has already had a negative impact and will continue to have a negative impact on the industry. What’s the plan (or should be the plan) if WeWork goes belly up? I am not in the commercial office space and therefore have no horse in the race, but if WeWork should in fact fail, it might present an opportunity to buy buildings in which they are principal tenants and reposition them as appropriate. If you were going to get in on the ground floor in any market, where would you go? I believe the largest market in the next decade will be created by the need for independent and assisted living resulting in the coming of age of the babyboomer generation. These opportunities exist in lower cost and warmer locations such as the Carolinas and Arizona. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Stuy Town/ Peter Cooper Village could very intelligently be reconfigured through tenant relocation and selective demolition to permit new construction of high-rise residential buildings that would take advantage of the location’s retail amenities and transportation. With a well thought out plan, this area could create more affordable housing units than what exists now to meet the mayor’s affordable housing goals. How would you like to reform LEED, WiredScore and StarEnergy? LEED would benefit from a more streamlined documentation process, as well as lowering the certification fees to incentivize developers to use the green and sustainability building initiatives that are good for a building, its residents and the environment. StarEnergy is straightforward as it is. What do you think about developers getting into the lending game? I prefer to have your money in my pocket than you having mine in yours.

Have you borrowed from a  developer-turnedlender? Never. Would you? Yes. Looking to the 2017 election, what should the next mayor do to help NYC? Focus on reducing crime, improving education, building affordable housing and creating an employment-friendly environment. If you weren’t in real estate, what would you do? Rabbi.

LIGHTNING ROUND: Kanye or Taylor Swift? The Beatles House of Cards or Game of Thrones? House of Cards Hillary or Donald? I’m with her! Mission Chinese or Jean-Georges? Corner Bistro Empire State Building or 1 World Trade Center? 1 WTC The New York Times or The New York Post? New York Post South Shore or Jersey Shore? Coney Island iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Do I have to choose? Martini or old fashioned? Scotch Buy, sell or hold? Hold

Are you lending? No.

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info@friedmanllp.com | 877.538.1670 Š 2016 Friedman LLP. All rights reserved. An Independent Member Firm of DFK with offices worldwide.

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Q&A

Anthony E. Malkin CHAIRMAN AND CHIEF EXECUTIVE OFFICER EMPIRE STATE REALTY TRUST What’s the plan (or should be the plan) if WeWork goes belly up? Special purpose installs like theirs are made for one thing, and that is probably to what purpose they will be put. Or else scrape it clean and start again.   How would you like to reform LEED, WiredScore and StarEnergy? LEED is really behind the times, bloated overhead which offers a scavenger hunt for points for high-priced real estate, which really does not move the sustainability needle. They are lost. They should adopt a program of investment- and return-based sustainability steps, for instance what we have pioneered and which is encompassed in Tenant Star. Progress is leaving them behind. WiredScore is excellent, simple and straightforward…you either have it or you don’t. EnergyStar will be greatly enhanced with the EPA’s new TenantStar program, rolling out soon. By offering recognition to tenants who participate in energy-efficient design and construction of their spaces, TenantStar will be a game-changer.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? A lot of people in real estate investment are in a strange Pirandello play right now…Instead of six characters in search of an author, they are investors in search of investments, and mission creep hits from time to time. Our leverage is very low, our sources of capital are traditional, and we are focused on our embedded, derisked growth right now.   If you weren’t in real estate, what would you do? No regrets, no “would have, should have, could have” here.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor House of Cards or Game of Thrones? House of Cards Empire State Building or 1 World Trade Center? ESB!!! The New York Times or The New York Post? New York Post iPhone or Android? BlackBerry Hamilton or Book of Mormon? Book of Mormon Martini or old fashioned? Martini

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Q&A

Sandeep Mathrani CHIEF EXECUTIVE OFFICER GENERAL GROWTH PROPERTIES What project currently under development will most transform New York City? (And why?) Hudson Yards. It’ll transform the West Side— development of a city within a city. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Yes, New York is attracting more foreign capital.   Has the hotel bubble already popped? Yes.   If you were going to get in on the ground floor in any market, where would you go? Fifty-second to 57th Streets on Fifth Avenue.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from  a  developer-turned-lender? Would you? Should only be done if one wants to own the asset.   If you weren’t in real estate, what would you do? Doctor.

LIGHTNING ROUND: Kanye or Taylor Swift? Kanye House of Cards or Game of Thrones? House of Cards Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? New York Post South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Sell

Hudson Yards...[will] transform the West Side. [It’s a] development of a city within a city.

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Q&A

Ron Moelis CHIEF EXECUTIVE OFFICER L+M DEVELOPMENT PARTNERS What project currently under development will most transform New York City? Essex Crossing. Post-Brexit, will New York come out ahead? New York will come out ahead because we are a well-governed city with progressive views, which draws international investment. Who’s to blame for the 421a debacle? Donald Trump. Has the hotel bubble already popped, and what does that mean for hospitality? There are a lot of new hotels, but I’m not in a position to say whether it’s a bubble or because tourism is up.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would continue to operate it as it is. How would you like to reform LEED, WiredScore and StarEnergy? New strategies and more implementation of Passive House standards. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? I am not a proponent of “lend-to-own.” If we loan, it’s usually to a partner as part of a development strategy.

What’s the plan (or should be the plan) if WeWork goes belly up? With or without WeWork, the concept will live on. Creative coworking space is great and is something millennials are excited about.

Looking to the 2017 election, what should the next mayor do to help NYC? Focus on quality affordable housing as a preventative health strategy and how we can further integrate wellness with housing, education and more usable open space.

If you were going to get in on the ground floor in any market, where would you go? Newark is an upand-coming market with a lot of positive energy.

If you weren’t in real estate, what would you do? I would be in a socially impactful area of venture capital.

LIGHTNING ROUND: Kanye or Taylor Swift? Kanye House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Red Rooster Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? New York Times South Shore or Jersey Shore? Westchester iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Hold

Newark is an up-and-coming market with a lot of positive energy.

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WE CARE. WE LISTEN. WE COMMUNICATE. WE DELIVER.

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Q&A

JEAN-GEORGES

45% KANYE WEST

13%

iPHONE

74%

ANDROID

Long before Justin Long faced off against John Hodgman in the “I’m a Mac” versus “I’m a P.C.” debate, America had long asked the “What kind of person are you?” question in various forms. Magic or Bird? Coke or Pepsi? Stones or Beatles? Landlords are no different. And that’s why we posed 12 different either/or choices for the 38 owners we surveyed. (Some of them took the liberty of adding third options.) Regarding music, do they like a cheerful, bumpy Taylor Swift ditty about a boy who loves the wrong girl? Or, do they prefer a profane, Jamie Foxx-sampled rap extravaganza about prenups and liposuction à la Kanye West? To the owners’ enormous discredit, Swift completely blew Yeezy out of the water by 60 percent of respondents to 13 percent. (Although it’s possible the owners thought we were asking about Swift and West’s faceoff at the 2009 VMA Awards, in which West grabbed the mic from

5% NEW YORK POST

21%

PLAYING THE

TAYLOR SWIFT

60%

MISSION CHINESE

34%

Swift and declared her less deserving of the award than Beyoncé Knowles—an action so ridiculous that even the president of the United States felt compelled to dub Kanye a “Jackass.”) Are they House of Cards addicts or Game of Thrones bingers? Forty-five percent prefer HOC versus only 29 percent for GOT. But that sizable margin was nothing compared to the division in the case of Broadway musicals: Hamilton has won the hearts of 58 percent of the respondents with a mere 13 percent holding true to The Book of Mormon, which was, y’know, kind of a big hit when it scored nine Tony awards in 2011. Dining was one of those tricky questions to gauge. We thought that it was probably best to ask whether they liked an opulent, old-school, Michelin-studded favorite (Jean-Georges), versus one of the new-fangled, experimental, Asian gastronomic temples, which a lot of dining critics swear by (Mission Chinese). For the most part, our respondents went for

HAMILTON

58%

BOOK OF MORMON

13%

NEW YORK TIMES

32%

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UBER

34%

MARTINI

34% OLD FASHIONED

YELLOW CAB

16%

PERCENTAGES the classic (Jean-Georges was favored by 45 percent; Mission Chinese by 21 percent). But this inspired a lot of owners to speak up for their favorite children: For instance, Marcus Samuelsson’s Harlem restaurant Red Rooster garnered 2.6 percent of the vote (or, Ron Moelis of L+M). Corner Bistro and Second Avenue Deli also nabbed 2.6 percent of the vote each (Jeff Levine and Jared Kushner, respectively). Media consumption habits are much more closely divided than one might expect; a respectable 12 out of 38 owners (32 percent) said that The New York Times was their go-to news source, only to be edged out by a single vote for The New York Post (34 percent), with another five (13 percent) saying they read both and two (5 percent) touting The Wall Street Journal. Another category where opinion was pretty closely divided was whether they bowed to the Art Deco splendor of the Empire State Building, or the new glass cool of 1 World Trade Center. The

SOUTH SHORE

45% JERSEY SHORE

old eked out a victory over the new: ESB won, 42 percent to 39 percent, or one single vote. The owners widely prefer iPhones to Androids—74 percent to 5 percent (which was the most lopsided preference, with another 8 percent holding onto their BlackBerries) and Uber to yellow cabs—34 percent to 26 percent. And if you’re going to drink with them, you should order a martini (34 percent) over an old fashioned (16 percent). Finally, there is the question of where they spend their liberty. The average owner we surveyed preferred the South Shore of Long Island to the Jersey Shore (45 percent to 13 percent), but plenty of them spoke up for the Berkshires, Connecticut, South Beach, the North Fork, Maine and other spots, including a “50-state road trip with the kids,” which commanded 2.6 percent of the vote (HT: Toby Moskovits of Heritage Equity Partners). —Max Gross

26% HOUSE OF CARDS

45%

GAME OF THRONES

29%

1 WORLD TRADE CENTER

39%

EMPIRE STATE BUILDING

42%

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Q&A

Joseph Moinian PRESIDENT AND CHIEF EXECUTIVE OFFICER THE MOINIAN GROUP What project currently under development will most transform New York City? (And why?) New York City is too large of a place for one single development to have a transformative impact on the city at large. That being said, I think that the completion of the series of buildings rising on the Far West Side has the potential to not only transform the city’s skyline but redefine the way that cities within cities are developed throughout the world.

What’s the plan (or should be the plan) if WeWork goes belly up? It’s premature at this point to begin the speculation of WeWork’s demise. It’s safe to say that coworking is here to stay, and WeWork will certainly be competing with a growing pool of similar companies.

Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? We’ve always been strong believers in the continued strength and resiliency of the New York City marketplace; therefore we always like to think that New York will come out ahead, no matter the circumstance. Additionally, since Brexit will basically be a negotiation over the next two years, New York has the opportunity during this time to gain some momentum and pull ahead of the U.K. As for investing in London, we currently don’t have any plans to do so, but never say never.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Sell it to Jonathan Gray.

Who’s to blame for the 421a debacle? Placing blame doesn’t matter at this point. It’s important for the local government to gather around one table and come up with a quick solution that satisfies all parties. Has the hotel bubble already popped, and what does that mean for hospitality? It hasn’t popped. Occupancy has stabilized and there have been a growing number of tourists taking flights to our local airports. It’s only a matter of time before New York City hotels regain their ADR.

If you were going to get in on the ground floor in any market, where would you go? The Far West Side.

How would you like to reform LEED, WiredScore and StarEnergy? There needs to be more knowledge and awareness surrounding these three programs. I would recommend a more extensive marketing program to promote them as much as possible because they’re an integral part to the smart growth of our city. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I think it’s a smart play. If a developer is lending, they have a deeper understanding of the back-of-the-house operations in real estate and would be more sympathetic to the needs of the entity they’re lending to versus a regulated banking entity. I would consider lending, but only in the markets that I’m very familiar with and active in.

should be sympathetic to the needs of the industry and put a curb on real estate tax and real estate tax increases—this would deter companies from moving out to neighboring cities across New York. If you weren’t in real estate, what would you do? I would be in some type of finance role and play the drums during my free time.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? New York Post South Shore or Jersey Shore? South Shore iPhone or Android? Andriod Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Hold

Looking to the 2017 election, what should the next mayor do to help NYC? The next mayor

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Q&A

Toby Moskovitz FOUNDER AND CHIEF EXECUTIVE OFFICER HERITAGE EQUITY PARTNERS What project currently under development will most transform New York City? (And why?) Transportation is key. Between the Long Island Railroad expansion to Grand Central, the Second Avenue subway extension, upcoming L train repairs and expansion and upgrades at LaGuardia Airport, New York City is being positioned to better service the growing population and increasing desire for millennials to work, live and play in urban centers. New York is arguably the greatest city in the world, but the transportation needs another boost to match the incredible development going on here. Especially as we become a center for the technology, innovation and maker markets, these infrastructure projects are all critical for the present and future success of New York. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? New York is seen as a “safe haven” for international investors. Brexit will likely enhance that sentiment, because we are a stable market with a diverse economy, with growing opportunities for development and investment as new markets emerge throughout the boroughs. Real estate values have historically risen in New York. I expect that to continue. Who’s to blame for the 421a debacle? The benefits of 421a were so strong that I think as a whole we took them for granted, and when the time came to renew, we were not as prepared as we needed to be. It may take a little time, but my sense is that we’ll get this issue straightened out. There’s simply too much at stake. Has the hotel bubble already popped, and what does that mean for hospitality? There’s always a danger in talking about an overall market, especially one as big as New York. Over the past several years we have seen a huge shift from the last hotel cycle, where mega hotels were the norm, replaced this time with boutique offerings. Many keys have been added to the inventory, but I see demand for new hotels, especially as emerging neighborhoods continue to change market dynamics. Sophisticated travelers who have been to New York many times want to stay in great neighborhoods out of the city, including Williamsburg, Bushwick and Brooklyn Heights.

What’s the plan (or should be the plan) if WeWork goes belly up? The coworking industry is a crucial part of the ecosystem of an entrepreneurial economy, and I am optimistic that this trend will continue. What will continue to be very interesting is the influence of the coworking culture on traditional office buildings and how owners design, build out and lease their space. How would you like to reform LEED, WiredScore and StarEnergy? Tenants across all sectors want to know that their office space provides them with the ability to access the web with speed, scope, and reliability in a manner that supports their existing and emerging technologies and platforms. Tenants are also committed to responsible citizenship, and LEED certification and clean energy standards are a crucial part of that. Both LEED and WiredScore are important parts of our development at 25 Kent Avenue.

bridge that gap in the market. Looking to the 2017 election, what should the next mayor do to help NYC? Work in concert with the governor so that they speak with more of a collective voice, with a focus on safety, security and continuing the advancement of the city’s infrastructure.

If you were going to get in on the ground floor in any market, where would you go? I am looking at a number of growing markets on the East Coast and look forward to building great mixed-use projects outside of New York as the urban movement continues to expand throughout the country.

If you weren’t in real estate, what would you do? Become a storyteller.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Ensure that it is well run and that it receives appropriate upgrades to keep up with modern times. There will likely never be a project quite like it again in New York City. The scale is far too difficult to replicate, although, I would love to see a project of this scope come to Brooklyn one day.

Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Mission Chinese or Jean-Georges? Anyone opening a kosher restaurant? Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? New York Times South Shore or Jersey Shore? Fifty-state road trip with the kids iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? Hold

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I have borrowed from many real estate owners and operators and believe that this form of lending is crucial for the market to maintain the liquidity necessary to support the growing needs of the population in New York. Banking regulation continues to discourage construction lending and private real estate families are a critical pocket that can help

LIGHTNING ROUND:

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Q&A

Jason Muss PRINCIPAL MUSS DEVELOPMENT What project currently under development will most transform New York City? (And why?) Hudson Yards is still the most significant project, but the expansion and upgrades at LaGuardia Airport are huge for New York. Bringing in tourists and business travelers is the lifeblood of a world-class city, and the way we had been doing it there was not great. I think Vice President Biden agrees with me on this one. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? New York will come out ahead if it continues to pursue common sense policies that welcome businesses, keeps crime low and produces enough housing to meet the demand. I don’t think it has anything to do with London or anywhere else. Brexit has probably been overhyped as it pertains to impacting the U.S. Who’s to blame for the 421a debacle? The problem is that 421a has been turned into a class issue when it is really an issue of what is good for the city and state. 421a translates into deals that make sense for developers and thus more desperately needed housing. We shouldn’t treat 421a’s profitability as a problem. It’s a prerequisite. Has the hotel bubble already popped, and what does that mean for hospitality? The idea that the hospitality industry is in a bubble is ludicrous. When more than 50 million people a year visit a single city and that city is the most famous city in the world, how can that be a bubble? Especially when the number of visitors has been gradually rising for the last 20 years. RevPAR and occupancy levels have actually held firm, even in the wake of additional supply and Airbnb taking some of the lower-end business. The financing market will probably prevent some of the supply that has been proposed from actually happening; historically the market has done a good job of regulating supply. What’s the plan (or should be the plan) if WeWork goes belly up? The plan should be that those

subtenants make direct deals with the landlords, who will then have more leases to write and more handholding and TI work to deal with. If you were going to get in on the ground floor in any market, where would you go? If I didn’t have family and business ties to New York City, I would find a democratic country in South America or Asia with strong population growth, a fair regulatory environment and reasonable taxes. I would then look for the largest city there—one that is hopefully as geographically constrained as Manhattan or Boston—and buy multifamily properties. That would involve a lot of travel and a steep learning curve but would pay off. Bogota, Colombia or Bangkok all come to mind.

the far reaches of Staten Island up through Queens and Brooklyn through Midtown. Some are suffering quietly, but don’t ignore them! As far as landlords like us, who have been operating in New York City for more than 100 years. There aren’t many of us left. While we can’t take our real estate out of New York, we can invest our new dollars into other cities, and many have been doing that. We choose to do new deals here and expect to continue to do so.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Run it conservatively and hold it in the family forever. Stuy Town/Peter Cooper Village is a blue chip property, and I am sure the new owners know what they are doing. It is impossible to recreate that kind of community in New York.

If you weren’t in real estate, what would you do? Teach or go into politics.

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I love doing business with fellow developers, but I wouldn’t want to be their borrower or lender, unless there is some kind of special circumstance. We enjoy longstanding relationships with some of the best and oldest banks in the country and look to continue that.

Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Game of Thrones Mission Chinese or Jean-Georges? No clue Empire State Building or 1 World Trade Center? ESB The New York Times or The New York Post? New York Post South Shore or Jersey Shore? South Shore! iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton, but both are great Martini or old fashioned? Neither Buy, sell or hold? Buy and hold

Looking to the 2017 election, what should the next mayor do to help NYC? I would ask him or her, as we have of previous mayors for many years, to keep in mind the needs of employers in this city. Don’t overregulate mom-and-pop retailers and businesses; don’t force them to pay above-market wages or make it difficult to wade through mazes of regulations. Don’t overfine them. We hear stories from our tenants, from

LIGHTNING ROUND:

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Q&A

Michael Phillips PRESIDENT JAMESTOWN What project currently under development will most transform New York City? Hudson Yards. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Yes, New York will come out ahead post-Brexit. Has the hotel bubble already popped, and what does that mean for hospitality? There is always an ebb and flow, but I think tourist demand will remain strong in New York. What’s the plan (or should be the plan) if WeWork goes belly up? The new workforce is dependent on flexible office space, so regardless of WeWork’s future, I think there will be need for creative coworking space in the long run. How would you like to reform LEED, WiredScore and StarEnergy? LEED has served as a good roadmap for green innovation, but it’s flawed and WiredScore and others fill in the gaps. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? It’s an interesting time, and we’re in the lending game on a selective basis. Looking to the 2017 election, what should the next mayor do to help NYC? Continued improvement at the New York City Department of Buildings to improve street management and better control construction and road closures. If you weren’t in real estate, what would you do? I’d circumnavigate by sail before it’s too late.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones?  House of Cards Hillary or Donald? Bloomberg Mission Chinese or Jean-Georges?  Jean-Georges Empire State Building or 1 World Trade Center?  Industry City The New York Times or The New York Post?  The New York Times South Shore or Jersey Shore? Maine iPhone or Android? iPhone Uber or yellow cab? Driver Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Martini Buy, sell or hold? All of the above

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Q&A

Eran Polack CHIEF EXECUTIVE OFFICER AND CO-FOUNDER HAP INVESTMENTS What project currently under development will most transform New York City? (And why?) I don’t think there is one project that is transforming the city. Instead I see several projects continuing the trend of revitalizing different areas of the city. The Hudson Yard project is creating a new center for businesses and residents in Midtown West. Also, the World Trade Center is showing strength and the ability to bounce back from a crisis. Lastly, all the new projects in the Bronx are showing the endless demand for real estate in New York City.

So in the long run the hotel and hospitality business will continue to be strong and successful.

Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? London is a tax “safe heaven” for foreigners who moved there. New York City is definitely not like that, so the fact that prices for real estate are declining in London and that New York City is not a tax shelter for foreigners, leads me to believe that the Brexit won’t have a big influence on New York City.

If you were going to get in on the ground floor in any market, where would you go? London.

Who’s to blame for the 421a debacle? Everyone and no one. 421a is a very important program for the city supply of affordable apartments and jobs in New York City. Also, it makes it easier and more profitable for investors, both domestic and international, and developers to participate in real estate. Has the hotel bubble already popped, and what does that mean for hospitality? I think that I can only answer that question for the long run. New York City is the easiest city to be a tourist in since everybody speaks English—not like Paris where most of the people speak French. The signs in the street are in English and not in Chinese as they are in Shanghai; the menus in restaurants are written in English and not Italian as in Italy. Countries around the world are going through major changes, and I think that in a few years everyone will shift to a four-day workweek giving people more free time to travel, and New York City will keep on being one of the top sites for tourists.

What’s the plan (or should be the plan) if WeWork goes belly up? I think WeWork is a very innovative company that has a creative, sustainable business model. If something goes wrong, landlords will find alternative methods and platforms to find tenants for their office space.

If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? The Stuy Town project is huge and has so much potential but has failed in the past. In order to be profitable, the business model must be balanced. I would wait for the J-51 to expire, and then I will preserve one-third of the units as affordable, maintain one-third as market rate rentals and sell one-third as condos. How would you like to reform LEED, WiredScore and StarEnergy? Attainable sustainability goals are a must for all project types—a responsibility for all types of developers. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turnedlender? Would you? I am not lending. I do believe that this is a positive thing because the developers that are lending money have a vast understanding and knowledge of the real estate industry. On the other hand, the developers will always have a big appetite to own the property. Looking to the 2017 election, what should the next mayor do to help NYC? I hope that the next mayor will be able to work with the governor, as well as New York City developers to bring back the 421a

program in a similar way or create a new program that offers similar benefits for developers. If you weren’t in real estate, what would you do? I would be a teacher. I place a tremendous value on education and continued learning for everyone. I think that you’re never too old to learn something new.

LIGHTNING ROUND: Kanye or Taylor Swift? Middle Eastern music House of Cards or Game of Thrones? I don’t have time to watch TV, so I haven’t watched any Hillary or Donald? I can’t vote Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? Times South Shore or Jersey Shore? Miami Beach iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Book of Mormon Martini or old fashioned? Martini Buy, sell or hold? Buy, sell and hold

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Q&A

Dan Rashin CO-PRESIDENT AND CHIEF EXECUTIVE OFFICER ROCKEFELLER GROUP What project currently under development will most transform New York City? (And why?) The biggest impact will come from infrastructure projects, not real estate developments. The extension of the Long Island Railroad into Grand Central is one and the extension of the Second Avenue subway is another. Getting people more efficiently to business districts is key to the real estate industry. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? Brexit hasn’t yet happened and, more importantly, the terms of a Brexit haven’t even been proposed, let alone negotiated. As such, it is impossible to predict what will happen in New York or London. However, what we know is that the Brexit vote has created uncertainty and a lot of market noise. Property prices in London have reacted and some players have jumped in. London will survive as a financial capital. The real question is what happens to Europe. I can’t see that New York comes out any worse, but I don’t foresee a dramatic shift toward New York as a result of Brexit. Who’s to blame for the 421a debacle? At this point it doesn’t really matter. Finding a solution matters. Has the hotel bubble already popped, and what does that mean for hospitality? The demand for hotel rooms will continue to increase over time. Supply may have jumped a bit ahead but in the medium to longer term, it will be absorbed, and the market will continue to expand. What’s the plan (or should be the plan) if WeWork goes belly up? If there is demand for this type of space, the market will figure out how to supply it and price it. If you were going to get in on the ground floor in any market, where would you go? I’d focus on overlooked infill markets with superior access to public transportation. How would you like to reform LEED, WiredScore and StarEnergy? I believe that benchmarks and

well-defined goals are important. It is always helpful, when pushing owners and developers to adopt practices, that benefits are identified and, in some cases, quantified. Two challenges with programs like these are to avoid becoming stale and to keep up with and encourage innovation. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Sometimes developers better understand the risks of complex projects; other times you are just inviting the fox into the hen house. While I wouldn’t rule it out, we are not in that business at this time. Looking to the 2017 election, what should the next mayor do to help NYC? Focus on 1) safety of our residents, commuters and visitors, 2) infrastructure and 3) striking the right balance between the needs of our communities and the businesses that create jobs and revenues that support them. If you weren’t in real estate, what would you do? I’d probably have found a branch of law to explore, other than being a litigator, which is what I was doing in 1984 before I entered the real estate business.

LIGHTNING ROUND: Kanye or Taylor Swift? At my age, Led Zeppelin House of Cards or Game of Thrones? House of Cards Hillary or Donald? Can I buy a vowel? Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? Empire State for New York. 1 World Trade Center for the United States. The New York Times or The New York Post? The Times in the morning, the Post in the evening South Shore or Jersey Shore? Coastal Connecticut iPhone or Android? iPhone Uber or yellow cab? Yellow cab all day long Hamilton or Book of Mormon? Can’t answer until I get a ticket to Hamilton Martini or old fashioned? Old fashioned Buy, sell or hold? Buy, sell and hold

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Q&A

Gregg Schenker PRESIDENT AND CO-MANAGING PARTNER ABS PARTNERS REAL ESTATE

Standardized specific benchmarks with line-item detail and a comparison matrix would add value.

What project currently under development will most transform New York City? (And why?) The Midtown East rezoning will change New York City for the next 100 years if passed, with sufficient density to encourage new development. Calatrava’s World Trade Center complex and the Fulton Center transportation hubs, along with new Lower Manhattan hotels, apartments and retail shops, have dramatically changed Downtown Manhattan into a “live, work, play, shop” destination with first-class modern office buildings. However, Hudson Yards is the active project that will most transform New York City, due to its extraordinary scale. This former lowdensity industrial and semi-industrial area had long been obsolete and will now be an integral part of the city’s future. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? London will come out ahead. I admire the courage of the people of England to stand up for what is best against the urging of their politicians, who are often compromised of shorter-term views and/or special interests. Independence will lead to economically viable trade deals and freedom. Who’s to blame for the 421a debacle? We have seen a lack of governmental leadership at the local level; political maneuvering between city and state officials; and the transmission of inaccurate information to the public for political posture. The 421a program has been extraordinarily important for many decades to enhance the economic viability of new multifamily development in New York. Ultimately, I am confident that the political powers entrusted with the good will of the people of New York will extend the program, along with 80/20. Has the hotel bubble already popped, and what does that mean for hospitality? Significant new hotel inventory has been added to New York City, and it was widely anticipated that absorption would take time and RevPAR would be affected. Owners that are not well capitalized could be impacted. My concern is the deterioration of the quality of life standards in this city, which Mayors Giuliani and Bloomberg worked to enhance. Their accomplishments are at risk of further deterioration, absent intervention. This problem could easily cast a shadow over economic activity, business and residential

What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? Given the present low-interest rate environment, we have been borrowing, not lending. ABS has not borrowed from developers.

development, and tourism growth. What’s the plan (or should be the plan) if WeWork goes belly up? The high-quality modern work environment created by WeWork is transformational. If it’s ahead of its time, a successor will likely follow. If you were going to get in on the ground floor in any market, where would you go? Brooklyn and Queens. The opportunity for growth there is extraordinary, particularly in low-density areas near substantial infrastructure, which is part of the mass transit system. We should not underestimate the inherent value of mass transit. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? I would maintain it as middle-income affordable housing, as originally intended. This would benefit the families presently living there and the future generations of New York City residents. An additional focus might be related to housing for teachers, firefighters and police. How would you like to reform LEED, WiredScore and StarEnergy? The WiredScore system has been influential in the ABS team’s efforts to maintain the highest level of service available for our tenants, at the most competitive pricing.

Looking to the 2017 election, what should the next mayor do to help New York City? The No. 1 priority is keeping the city and its residents, visitors and workers safe; hire more police, encourage them to serve and support them in a steadfast manner. Given the large budgetary allocation for education, it’s also important to continue being vigilant in providing the best possible education for young people. Then, clear policy initiatives, a thoughtful budget, balanced incentives for new commercial and residential development, and a substantial affordable housing initiative to provide a platform for the future of diversity, sustainability, workforce housing, and business attraction and retention. If you weren’t in real estate, what would you do? Work to help others.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? Not familiar with either Hillary or Donald? Change—overturn Citizens United vs FEC Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? The New York Post South Shore or Jersey Shore? Southampton iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Neither—club soda Buy, sell or hold? Hold

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Q&A

Larry Silverstein CHAIRMAN SILVERSTEIN PROPERTIES What project currently under development will most transform New York City? (And why?) I have great difficulty in giving you any objectivity here, because of the fact that I spent 15 years of my life rebuilding the World Trade Center. How could I focus on anybody else’s development? The residential population has tripled in the last 15 years. No other part of the city has grown to the same degree. You put it all together, it’s a great place to work. It’s a great place to live. It’s a great place to visit. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I think New York comes out ahead in the short term, not in the long term. Brexit long term is bad for Europe. It’s bad for the European Union. It’s bad for the common market. I think the European Union will come apart. That’s not

LIGHTNING ROUND: Empire State Building or 1 World Trade Center? It’s hard for me to resist not taking 1 World Trade Center Hamilton or Book of Mormon? I thought both shows were fascinating and very interesting. The more exciting, to me, of the two was Hamilton Buy, sell or hold? Do I like to buy? Yes. Do I like to sell? No. Am I a holder? Very much so.

good for London; that’s not good for the European Union; that’s not good for New York either, because uncertainty doesn’t work well for anybody. That’s my concern. Who’s to blame for the 421a debacle? I don’t know. I think there’s no purpose served in trying to access blame. What’s needed, however, is a much more affirmative attitude, and that is getting back together again—getting back to operations. So whatever has to be done, whoever has to do it, needs to get on it and move forward with it. We need 421a if we’re going to have rental housing in New York. Has the hotel bubble already popped, and what does that mean for hospitality? Well we’ve got plenty of hotel rooms. But the truth is that for the first time Lower Manhattan will have a fivestar Four Seasons hotel. It’s happening. From that point on, we’ll have a five-star hotel a block north of the Trade Center, which will be another dimension for everything else that’s gone on around here. What’s the plan (or should be the plan) if WeWork goes belly up? Oh graces. I don’t know. WeWork is doing very well. They’re in a number of locations with significant investment in each of those locations. I can’t see any reason why they should go belly up. I hope they don’t. If you were going to get in on the ground floor in any market, where would you go? I would probably go to the submarkets of New York City. I would look seriously at the South Bronx. I would look seriously at waterfront property in Brooklyn or anywhere in the metropolitan area. I find it very exciting. Of course, anything that comes up in the city is hard to resist not looking seriously at. How would you like to reform LEED, WiredScore and StarEnergy? We are the first LEED-certified

office building in New York here at 7 World Trade Center. It’s done very well. People are now enormously energy conscious, efficiency conscious and environmentally conscious. Any new initiative that’s out there that can help all of us we have to look at seriously. I think we’ve done that with LEED certification, and it’s gone very well. What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? I think it’s a subset of much of what we do. Have we gotten into it? No. What will happen tomorrow? Just don’t know. Like anything else in life you need to keep your eyes open. You need to be flexible in thought and you need to look at the opportunities and decide as to whether or not they’re for you. What will happen in the future? Who knows? Don’t know. But anything is possible. Looking to the 2017 election, what should the next mayor do to help NYC? Whoever is in office should work diligently to keeping New York safe, keep the economy strong, making sure that we have a top-flight educational system, a top-flight mass transit system and quality of life has to be maintained at a very high level. Because these are the benefits of New York, and we under no circumstance want those benefits to diminish in any sense. If you weren’t in real estate, what would you do? Well, since I’ve only been at it for 60 years, it’s hard for me to think of any other alternative.

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Q&A

Lender Types 2016 Volume (in Millions)

Where Some of NYC’s Biggest Landlords Get Their Bucks

Foreign Bank Life Insurance Company National Bank Specialty Lender

$1,955.20

Agency Lender

BY DANIELLE BALBI

W

e all know that this city’s biggest real estate folks are busy—sometimes too busy to fill out Commercial Observer’s Owners Magazine survey, but we still wanted to include some of those firms (including the Brodsky Organization, Jack Resnick & Sons, Related Companies, Rudin Management Company, Thor Equities and Vornado Realty Trust) who couldn’t participate this year. We took a dive into the financings they’ve

completed since January of this year through a sample set of data from CrediFi. Vornado was particularly busy securing debt on its New York City properties, with $2.28 billion in loans closed since the new year (of the sample set). Perhaps more notable than how much these big real estate firms borrowed is where the money came from: Foreign banks provided nearly $2 billion, while life insurances chipped in $517 million to these six borrowers alone.

Regional Bank

Data courtesy of

Borrower Name

Building Address

Borough (Manhattan, Brooklyn, etc.)

Loan Size

Origination Date

Originator

Lender Type

Related Companies

566/568 Baltic Street

Brooklyn

$4.85 million

May 18, 2016

New York Community Bank

Regional Bank

3001 Avenue R/3004 Avenue R/1865 Burnett Street

Brooklyn

$22.54 million

Aug. 17, 2016

Arbor Realty Trust

Agency Lender

2109 Borden Avenue

Queens

$14.54 million

Feb. 29, 2016

TPG Real Estate Finance

Specialty Lender

2109 Borden Avenue

Queens

$20.76 million

Feb. 29, 2016

TPG Real Estate Finance

Specialty Lender

309 East 95th Street

Manhattan

$6.25 million

March 30, 2016

Bank United

Regional Bank

324 West 30th Street

Manhattan

$75 million

March 26, 2016

Wells Fargo

National Bank

80 Gold Street

Manhattan

$25 million

March 3, 2016

Principal Life Insurance

Life Insurance Co.

135 East 55th Street

Manhattan

$10 million

May 5, 2016

Prudential Insurance Company of America

Life Insurance Co.

641 Lexington Avenue

Manhattan

$25 million

May 5, 2016

Prudential Insurance Company of America

Life Insurance Co.

35 Madison Avenue

Manhattan

$76 million

June 22, 2016

Prudential Insurance Company of America

Life Insurance Co.

39-41 East 51st Street

Manhattan

$100 million

Aug. 1, 2016

J.P. Morgan Chase

National Bank

Rudin Management Company

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$4.85 $27.39

Q&A

Company Borrowing 2016

Loan Volume (in Millions)

$269.80

$263.00 $306.54

$236.00

$295.00 $256.20

$143.94 Thor Equities

$517.05

$2,280.50 Jack Resnick & Sons

Brodsky Organization Thor Equities

Vornado Realty Trust

Jack Resnick & Sons

Rudin Management Company

Brodsky Organization

Related Companies

Vornado Realty Trust Borrower Name

Borough (Manhattan, Brooklyn, etc.)

Loan Size

770 Broadway

Manhattan

$700 million

Feb. 8, 2016

1 Park Avenue

Manhattan

$300 million

March 7, 2016

223 West 21st Street

Manhattan

$500,000

May 12, 2016

Related Companies National Cooperative Bank

7 West 34th Street

Manhattan

$300 million

May 16, 2016

Metropolitan Life Insurance

Life Insurance Co

70 West 93rd Street and 50 West 93rd Street

Manhattan

$80 million

Aug. 8, 2016

Capital One

Regional Bank

33 Eeast 48th Street and NY Bankers Trust Building

Manhattan

$900 million

May 11, 2016

Deutsche Bank

Foreign Bank

19 West 69th Street

Manhattan

$5 million

Feb. 1, 2016

MONY Life Insurance Comapny of America

Life Insurance Co

500 West 59th Street

Manhattan

$250 million

May 26, 2016

Wells Fargo

National Bank

231 West 13th Street

Manhattan

$1.2 million

June 29, 2016

M&T Bank

Regional Bank

Jack Resnick & Sons

199 Water Street

Manhattan

$295 million

July 8, 2016

AXA Equitable Life Insurance Company

Life Insurance Co.

Thor Equities

693 Fifth Avenue

Manhattan

$250 million

June 9, 2016

J.P. Morgan Chase

National Bank

1122 Madison Avenue

Manhattan

$13 million

Feb. 2, 2016

Israel Discount Bank of New York

Foreign Bank

Vornado Realty Trust

Brodsky Organization

Building Address

Origination Date

Originator

Lender Type

Rudin Management Morgan Stanley Company

National Bank

DekaBank

Foreign Bank Regional Bank

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10/7/16 9:58 AM


Q&A

Jonathan Simon FOUNDER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER SIMON BARON What project currently under development will most transform New York City? (And why?) Hudson Yards. It’s the next great New York City neighborhood. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? I do think New York will come out ahead. It’s more stable, and there’s only one New York. London in the short run will be scary, but that’s usually the time to buy.     Who’s to blame for the 421a debacle? There’s a lot of blame to go around and a lot of politics at work. The unfortunate reality is that the middle class will end up paying for this because there will end up being a lack of new rental housing, which in the long run will drive up rental rates.   Has the hotel bubble already popped, and what does that mean for hospitality? There’s a lot of new supply coming into the market, but New York City is and will continue to be a global city that attracts people from all over the world. Long term I believe well-conceived projects will do fine. What’s the plan (or should be the plan) if WeWork goes belly up? I don’t see them going belly up. They provide a very unique product. They may be overvalued in the short run, but the model should continue to work. I wouldn’t be surprised if the valuation goes from $16 billion down to $4 billion overnight.   If you were going to get in on the ground floor in any market, where would you go? I would continue to focus on urban markets where demand drivers are consistent. At the end of the

day, it’s all about basis, but being on the right side of the demand equation is also important. We are very active in a few emerging submarkets that we are excited about including Long Island City, North Williamsburg/Greenpoint and Downtown Los Angeles to name a few. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Rental apartments. How would you like to reform LEED, WiredScore and StarEnergy? We look for opportunities where it makes financial sense to implement industry best practices. I think it is important to be conscious of the greater issues and our role in being the progress we want to see. With issues such as climate change and urbanization becoming hot points in today’s greater conversation, I think certifications like these continue to be useful guiding metrics for developers to measure themselves against and help drive a collective effort to respond to these enormously important issues.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you? It’s a natural extension of the business, especially if you are vertically integrated and comfortable taking over the real estate. We have not yet as we have been able to create the most value through creative repositioning and development, but it is certainly something we would consider down the line.   Looking to the 2017 election, what should the next mayor do to help NYC? He or she should work toward pragmatic solutions to solve issues

such as homelessness and affordable housing and should focus on public transportation as a tool to connect the outer boroughs to create a better quality of life for all New Yorkers. If you weren’t in real estate, what would you do? I have always been fascinated with being a trader. I like the action.

LIGHTNING ROUND: Kanye or Taylor Swift? Kanye House of Cards or Game of Thrones? House of Cards Hillary or Donald? Donald (my wife wants to kill me) Mission Chinese or Jean-Georges? Mission Chinese Empire State Building or 1 World Trade Center? 1 World Trade Center The New York Times or The New York Post? The New York Post South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Hamilton Martini or old fashioned? Old Fashioned Buy, sell or hold? Hold

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Commercial Observer is expanding its unparalleled coverage of the commercial real estate industry to host a half-dayconference focused on current trends in the finance industry. This targeted event features the most dynamic players nationwide, sharing their insights on the state of lending from a local and international lens.

AGENDA & SPEAKERS How Volatility Is Shaping Global Lending Patterns

• David Durning, President & CEO, Prudential Mortgage Capital • Michael Higgins, Managing Director & Head of Real Estate Finance, CIBC Capital Markets • Jerome Sanzo, Executive Director - Head of Real Estate Finance, Industrial and Commercial Bank of China Empire State of Mind: Lending Hotspots

• Peter D’Arcy, Regional President, New York City and Long Island & Head of Commercial Real Estate Segment, M&T Bank • Ralph Herzka, Chairman & CEO, Meridian Capital Group • Steven Kenny, Senior Vice President, Bank of America Merrill Lynch • Rick Lyon, Executive Vice President, Head of Commercial Real Estate, Capital One Bank Getting Creative: Who’s Stepping in to Replace Traditional Lenders

• Tony Fineman, Managing Director, ACORE Capital • Greta Guggenheim, CEO, TPG Real Estate Finance Trust • Jason Kollandar, MSD Partners, L.P. • Peter Sotoloff, Managing Partner & CIO, Mack Real Estate Credit Strategies Additional Speakers To Be Announced

SPONSORS

Additional Sponsored To Be Announced

LOOKING TO REACH THIS AUDIENCE?

For speaking and sponsorship information, contact Barbara Ginsburg Shapiro at bshapiro@commercialobserver.com or 212.407.9383 For all other inquiries, contact rsvp@commercialobserver.com

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Q&A

Norman Sturner PRESIDENT AND CHIEF EXECUTIVE OFFICER MHP REAL ESTATE SERVICES What project currently under development will most transform New York City? Related’s West Side Project. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? London was supposed to compete with NYSE…not! Has the hotel bubble already popped, and what does that mean for hospitality? It’s a cycle; it will return in another two to three years. What’s the plan (or should be the plan) if WeWork goes belly up? Why would anyone mention “WeWork” and “belly up” in the same sentence?   If you were going to get in on the ground floor in any market, where would you go? Manhattan in the 1970s. If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? We would not acquire—it’s not our business. Looking to the 2017 election, what should the next mayor do to help NYC? More middle-class housing, better inner-city transportation, more cops on the streets.

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor Swift House of Cards or Game of Thrones? House of Cards Hillary or Donald? Hillary! Mission Chinese or Jean-Georges? Neither Empire State Building or 1 World Trade Center? ESB

The New York Times or The New York Post? New York Times South Shore or Jersey Shore? Jersey Shore iPhone or Android? iPhone Uber or yellow cab? Yellow cab Hamilton or Book of Mormon? Neither Martini or old fashioned? Beer Buy, sell or hold? Buy and sell

Why would anyone mention ‘WeWork’ and ‘belly up’ in the same sentence?

If you weren’t in real estate, what would you do? Teach.

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THE 2016 AIPAC REAL ESTATE LUNCHEON

AIPAC REAL ESTATE DIVISION EXECUTIVE COUNCIL SIMON ZIFF The Ackman-Ziff Real Estate Group Chair DANIEL BENEDICT Benedict Realty Group Vice Chair JASON MUSS Muss Development Vice Chair RICHARD BASSUK The Greystone Bassuk Group Founding Chair, AIPAC Real Estate Division AIPAC National Board CRAIG H. SOLOMON Square Mile Capital Management National Real Estate Chair ROBERT A. COHEN R.A. Cohen & Associates, Inc. AIPAC Chairman of the Board JEFFREY B. CITRIN Square Mile Capital Management LAWRENCE J. COHEN Pembroke Companies MATT ENGEL Langsam Property Services JONATHAN FALIK JF Capital ZIEL FELDMAN HFZ Capital Advisors WILLIAM FRIEDLAND Friedland Properties

MONDAY, OCTOBER 31

ST

GRAND HYATT HOTEL, NEW YORK CITY 11:30 AM - 12:30 PM MEET & GREET

12:30 PM - 2:00 PM LUNCH & PROGRAM

LUNCHEON CHAIRS

ADAM GILBERT Nixon Peabody LLP CARL J. GOLDBERG Canoe Brook Management JUSTIN GREEN HaysVentures LLC SCOTT HARRIS Brown Harris Stevens MITCHELL HOCHBERG Lightstone JONAS KATZOFF CapitalSource GREGORY KRAUT Avison Young DAVID KRISS Kriss & Feuerstein LLP ANDREW S. LEVINE SL Green Realty Corp. JEFFREY E. LEVINE Douglaston Development DANIELLE LOMBARDO Lockton Companies ABBIE NEWMAN Abigail Michaels Concierge BEN OHEBSHALOM Sky Management Corp. KEN OLSON POKO Partners, LLC

MILTON COOPER

KIMCO REALTY CORP. HONORARY EVENT CHAIR

BEN ASHKENAZY

ASHKENAZY ACQUISITION CORP. LUNCHEON CO-CHAIR

MITCHELL HOCHBERG LIGHTSTONE LUNCHEON CO-CHAIR

KEITH PATTIZ McDermott, Will & Emery LLP BERNDT PERL APF Properties HOWARD ROTH EY MITCHELL E. RUDIN Mack-Cali Realty Corporation

Minimum contribution levels of $25,000 to sponsor a table, and $3,600 to attend. All $5,000 and above contributors will be recognized as Committee Members on the luncheon program. Please contact Joe Nadis, Director of the AIPAC Real Estate Division in New York at (212) 750-4110 or nyrealestate@aipac.org to make your reservation.

BUILDING FOR THE FUTURE OF THE U.S. - ISRAEL RELATIONSHIP

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ALAN SCHOLNICK Silverback Development SHIMON SHKURY Ariel Property Advisors BRUCE STACHENFELD Duval & Stachenfeld LLP ARIEL TIROSH Douglas Elliman YOEL ZAGELBAUM Riverside Abstract

JOSEPH NADIS Director ORIT CARMIEL Associate Director JAMIE FUTTERMAN Associate Director JOSHUA SIDEROW Associate Director

10/6/16 10:06 AM


Q&A

David Zar PRINCIPAL ZAR PROPERTY NY What project currently under development will most transform New York City? (And why?) Hudson Yards—it is more than just a neighborhood: It’s a city within a city. Most importantly, the participation from the largest developers in the city and commitment from signed powerhouse commercial tenants like BCG (Boston Consulting Group) and retailers such as Neiman Marcus solidifies that. Post-Brexit, will New York come out ahead? And what are your thoughts on investing in London? There are still many uncertainties from Brexit, so it’s too early to tell. London remains a financial and cultural capital, and the world’s most visited city, so while it’s personally not part of our investment criteria, it will continue to attract the world’s top individual and institutional investors.   Who’s to blame for the 421a debacle? De Blasio and nobody else. His policies are a detriment to New York City.   Has the hotel bubble already popped, and what does that mean for hospitality?  No. Our city continues to attract tens of millions of tourists annually from all over the world, and those numbers continue to increase. Limited-service hotels are the largest segment to enter the market and those rooms appeal the most to tourists.   What’s the plan (or should be the plan) if WeWork goes belly up? The coworking concept continues to be popular, so I find it to be unlikely. WeWork also happens to be one of our tenants, so I hope that is not the case. However, the worst-case scenario for us and other landlords is that we

would be left with a beautiful, all-glass, officeintensive installation. If you were going to get in on the ground floor in any market, where would you go? An affluent location within close proximity to New York City—Greenwich, Conn.; East Hampton, N.Y. We generally are long-term holders, and past experience has indicated that those areas can withstand all stages of the real estate cycle, specifically a downturn in the market.   If you were to take over Stuy Town/Peter Cooper Village, what would you do with it? Keep those units affordable and find alternate ways to maximize IRR and remain profitable. Maybe work with the city for incentives or air rights? I also feel like the residents are underserved on the retail side so maybe develop and create a retail component within.   What do you think about developers getting into the lending game? Are you lending? Have you borrowed from a developer-turned-lender? Would you?  In such a competitive market, developers need to try new unconventional ways to generate a return and build relationships. At the same time investors have an alternate way of obtaining capital in a market when lenders are becoming cautious and tightening their standards. If it works, it works. Looking to the 2017 election, what should the next mayor do to help NYC? Come up with an intelligent, long-term plan to alleviate the growing homeless population. Housing them in scattered hotels is a convenient Band-Aid, but it’s not solving the underlying problem.  Secondly

and simply, be unbiased and fair to every resident, commuter and constituent—from the landlords who cover a considerable portion of the city’s revenue to safeguarding the working class that our city most heavily relies on.   If you weren’t in real estate, what would you do?  My hobbies are music and rock concerts, so it would likely be a combination of those in the music industry. It’s still not too late—when our portfolio reaches 100 percent occupancy I’ll take a summer off and intern at Live Nation. 

LIGHTNING ROUND: Kanye or Taylor Swift? Taylor House of Cards or Game of Thrones? House of Cards Hillary or Donald? Donald Mission Chinese or Jean-Georges? Jean-Georges Empire State Building or 1 World Trade Center? Empire State Building The New York Times or The New York Post? New York Post South Shore or Jersey Shore? South Shore iPhone or Android? iPhone Uber or yellow cab? Uber Hamilton or Book of Mormon? Book of Mormon Martini or old fashioned? Old fashioned Buy, sell or hold? Hold

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ONE WORLD TRADE CENTER ONE BRYANT PARK 4 TIMES SQUARE 1133 AVENUE OF THE AMERICAS 1155 AVENUE OF THE AMERICAS

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114 WEST 47TH STREET 655 THIRD AVENUE 675 THIRD AVENUE 733 THIRD AVENUE 825 THIRD AVENUE 205 EAST 42ND STREET HISTORIC FRONT STREET EŌS HELENɅ 57 WEST VIɅ 57 WEST FRɅNK 57 WEST

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