The Elections That Could Shake Up Real Estate

0:05Lilah Burke: Welcome to Deconstruct, a podcast from The Real Deal. I'm Lila Burke. And I'm Hannah Kramer.

0:11Hannah Kramer: Today, we'll talk about an altercation at the Amman in New York, why the plaza is closing its doors, and look into a Miami developer who's come under pressure from lenders.

0:22Lilah Burke: But before all that, for our main story, we'll be looking at elections around the country and what is at stake for real estate. Let's dive in.

0:33Hannah Kramer: Across the country, we are gearing up to cover a number of competitive elections that could have a very meaningful impact on real estate. While our beat is business, politics can have a huge influence on individual operators' ability to get the deal done. So today, we have our national managing editor, Jerry Sullivan, with us. Jerry, welcome to the pod. Good to be here. Thank you. So, Jerry, what's sort of the big picture as far as the political elections coming up and what it means for real estate? Well, you know, the big picture I think everybody sees is the DSA factor and the increasing, I guess, progressive influence in the Democratic Party.

1:12And now that's coming against MAGA and the Trump midterm. And so everyone's got to sort all that out. I think, though, as we go through this, you'll see that lessens and lessens as you get local and start zeroing in on what's actually going on in the ground and certain ballot measures or candidates or certain offices that we don't always think about, you know, maybe or aren't grabbing all the attention. Might be a little more in play, especially for from real estate point of view.

1:38Hannah Kramer: Absolutely. And of course, we all know there's no presidential election this year, but it really is these local races that have often so much more impact on real estate than the biggest national ones that get the most attention. So let's talk about which races you're particularly interested in covering right now. Los Angeles is a good case in point of what you bring up about the local effect. So we have mayoral election there. And it's very much, it reflects a few things about LA politics. First, it's an intramural fight with Democrats, right, because the Republican Party just hardly exists in L.A.

2:12and barely in California anymore. And we'll talk about the governor's race a little bit, too. But, you know, a mayor is a city government is where the rubber meets the road for real estate. And, yes, there can be federal effects. And, yes, the state has a lot to say in California especially. But, you know, that will be a determining factor, and that's reason for real estate people to tune in. And unfortunately, there's not a great deal of difference between the two candidates in L.A., so I'm not sure, you know, how much it will matter ultimately, but we'll see.

2:39Hannah Kramer: And that is sort of my first question for you on this front, right? In this L.A. mayor's race, we have Nithya Raman, we have incumbent mayor Karen Bass. From the real estate perspective, what is the difference on these two? And what kind of real estate issues are at play in the mayor's race specifically? Is fire rebuild driving potential voters? Is it Measure ULA? You know, fire rebuild has been a frustration in the city of Los Angeles on the west side in Pacific Palisades where the fire hit. But I think it's been neutralized. I think the mayor has gone, taken the knocks for that. And just recently, Rick Caruso, a very well-known developer who actually ran against Bass in a very bitter campaign four years ago, all but endorsed her.

3:24And I think that helped neutralize the critique of her on the fire response. And she had caught a lot of criticism for that, and legitimately so, for the response. And then there's the rebuild, which is a different aspect. And so that's grinding along. But I don't think at this point it's baked in now. ULA, there's really not much difference. And ULA is the mansion tax, right? Yeah, let's take a minute on a good point. Measure ULA is a property transfer tax that was really incorrectly labeled a mansion tax. It applies to commercial real estate as well as residential. It was sort of billed as a mansion tax and got a bumper sticker campaign and passed.

4:01And to be honest, the industry did a very poor job of opposing it. And it just sailed right through. And now they have to live with it. Both Councilmember Rahman and Mayor Bass are generally for ULA. Nithya Rahman, during the primary, did suggest a carve-out change to ULA. It really looked like a move tailored for a primary. She was trying to expand a little bit, go to the center a little bit without losing her base. And I think she did succeed at that. That got her through the primary. I don't think it's a factor now. I saw something the other day, I think it was Politico writing it. Oh, well, you know, Nithya Raman is going to try and challenge councilmanic privilege, which is a very big thing.

4:39Most cities have some form of it. And where a council member, essentially his or her colleagues, won't challenge them on a real estate project or land use matter. And that's fine to say. But the truth is LA's mayor by charter is a weak mayor. You know, you can say you're going to try and change that. But you have 15 council members who kind of like that councilmanic privilege and are pretty well committed to keeping that. So there's just not that much difference between the two. Even on the DSA, Nithya Raman, I think, is officially aligned with the DSA. Karen Bass, you know, her socialist leanings go back to she was in the Vance Ramos Brigade going to Cuba when she was younger.

5:16Very clearly of that mindset. So there's just not that much difference. And at the state level in California, we have the governor's race and then also some ballot initiatives. What's sort of at stake for real estate in the California state elections? You know, for the governor's race, we really don't know. And we don't know because California, again, is the Democratic Party dominates. I think it's 62 percent voter registration, somewhere in the 30s for the Republicans. And so it's not real competitive. There's some frustration. And Javier Becerra, who is the Democratic nominee, you know, appears to just be running out the clock.

5:50He did one debate. He's not doing any more. He's not doing a lot of high-profile media. And, you know, I know that's frustrating, but from a political, electoral standpoint, why would you? He doesn't need to. He can run out the clock. He is going to be the next governor of California. But the downside for that is he doesn't have to really tell us too much about what he plans. Barring some really incredible turn of events, he's going to be the next governor of California.

6:17Hannah Kramer: And there were a number of real estate issues kind of at play in the state government in the last few months, things like CEQA reform. Is it right now we just have to kind of wait until Becerra comes into office to find out, you know, whether he's going to push harder on things like Builder's Amity? Mr. Becerra, who has a deep, longstanding career in California politics, and he was a congressman from an area of Los Angeles for more than 20 years and rose to prominence in the Democratic House leadership. It was then a tab, and it was kind of a surprise when Kamala Harris was elected senator. She had been attorney general, and Javier Becerra was named attorney general and then reelected to that post.

6:57And that, of course, was appointed to a cabinet post as, I believe, Health and Human Services Secretary in the Biden administration. He's one of these politicians who you will hear a lot about, oh, he's not all that impressive or not all that charismatic, but he just seems to keep advancing. And he will be the next governor of California. So, you know, he's doing something right. It's good for him politically not to campaign much right now. Will it be good for the people of California? We'll just have to see. He's a bit of a question mark at this point.

7:27Hannah Kramer: One interesting story that we ran recently, our reporter out in Los Angeles, Kerry Hamanaka, did a story about how a number of the local real estate organizations in L.A. just aren't making a recommendation in the L.A. mayor's case. I'm wondering what you think that says about sort of Los Angeles and California more broadly, the industry's attitude towards its politicians. Are they just like, we're subject to this and there's nothing we can do anyway, so it doesn't even matter if we endorse someone? Well, you know, it's interesting. Now, there's been quite a bit of real estate backing for Becerra as governor.

8:03That's an easy bet. All you have to do is look at the voter registration numbers in California and say, I think I'll go with the Democrat and write that check. The mayor's race is close. An mayor can hurt you more than a governor. A mayor can get in your way or exact vengeance in a lot of different ways. And so it makes it a little tougher to make that call. And you might want to sit it out. When you really put these candidates up against one another, especially for realizing not a lot of difference. I think right now what has become now the proxy for everything is public safety. And because there's not a lot of difference elsewhere.

8:37Two weeks ago, I would have said, I think Rahman's going to win this. Seemed to have the momentum was moving forward. And she stumbled, I think, referring to intimating the police chief was a fascist. You know, I'll say that about a fellow, Jim McDonald, who has worked in Los Angeles a long time and the label doesn't match. And he knows a lot of people who will tell you that's not right. And then, you know, really stumbled when she referred to Daryl Gates, an old police chief who really was proudly paramilitaristic about LAPD. It was the old before reform LAPD and just especially in communities of color, a lot of bad memories of Daryl Gates.

9:15And for some reason, Nithya Rahman pointed to him as like the example of a good police chief. There's a huge error on the campaign trail. And I think that's going to cost her, too. OK, so that's California. Moving to Texas. What are we seeing there? You know, Texas is really interesting because you have the big race set inside the governor's race, which I think the incumbent is going to win. And unless the Democratic blue wave really happens and really gets big and crests, I think Governor Abbott will win real election closer than he'd like, but I think he'll win.

9:45Hannah Kramer: But that would be very surprising to everyone, it seems, in Texas. For a Democratic—yeah, I don't think they've had a Democratic governor since Ann Richards back in the 90s. The other race that's captivating a lot of people is the race for Senate, which features Attorney General Ken Paxton, who has a very checkered career and was impeached by the Texas State House of Representatives and beat the case, been surrounded by controversy, very big MAGA, very big ties to President Trump. And he's running against a progressive Democrat, James Tallarico. Well, when you think about it, Ken Paxton will probably have less, much less influence on Texas real estate as a senator than he would as attorney general.

10:27The Texas attorney general's office is actually quite muscular. And Ken Paxton has maybe abused the office in some ways, but are also just tested new theories of law in a lot of ways. Right. And some people view it that way. In any case, he's had a great effect. And for instance, he just walked back on his data center. He was pretty much a data center, okay, let's get him built, economic development. And he's, I think, read the tea leaves of political opposition and rolled back a little bit on that. But for instance, an attorney general can affect that. A senator is one of 100 in Washington, D.C.

11:03I'm not saying they have no influence or there's never an opportunity, but it's less direct. I think more interesting is the race to replace Ken Paxton as attorney general. And that gets very interesting and it's not getting much attention. But you have two candidates, Mays Middleton from down Galveston, which is Houston area, Republican MAGA, right? And then Nathan Johnson, a Dallas Democrat. And there's a libertarian who's getting 2 % or 3%, which could affect the race, but won't win it in any case. Everything you need to know about Texas politics is in this. Both of those candidates have gotten$125 ,000 from the Sands Texas PAC.

11:39And it's Miriam Adelson, who owns the Sands Hotel, or Sands Operation, now owns the Dallas Mavericks, wants to use the team as a basis for developing a big casino mixed-use project. She's covered her bets, right? And so that's really—now you're getting to real politics, right? And we'll see where that goes. There's not been a lot of polling on that race. I don't really know how it's going. But that was one to watch. So we'll have to see.

12:07Hannah Kramer: Just going back to Ken Paxton for a second, I think worth recounting that a lot of, or at least one of the flags in his sort of checkered past is his affiliation with Austin real estate developer Nate Paul, right? Oh, absolutely. I mean, and that runs thick through the impeachment case. And refresh us on Nate Paul? Nate Paul, Austin developer, overextended. I'd ran into all kinds of difficulties. Distress was trying to sort through it. and the charge being that Paxton unduly used influence to aid him in his efforts to get through it. And that became, you know, a big part of, again, the checkered past of Paxton.

12:46But, you know, I have to tell you, he seems to be blowing right through that. The last poll I saw, this is deadlocked. I don't think anyone could look at Ken Paxton and see anything other than a really flawed candidate. You know, now, politically speaking, James Tallarico is a very tough job being a progressive Democrat in Texas, right? So maybe that balances out. But it's really remarkable that Paxton, you know, at this point, if you look at the polls that have been so far this year have been undercounting the Republican side, Paxton may very well be the next senator, all the checkered pasts, you know, regardless.

13:22Hannah Kramer: Now, I want to talk about Florida quickly. There is a Florida governor's race. As we've talked about, you know, some of these governor's races are a little bit less meaningful than a lot of the local cases. There are a couple of local elections in South Florida. I don't want to get too deep into those because we are going to talk about Florida politics quite a good bit at our upcoming Miami Forum, which I hope all of our listeners in South Florida will join us for on November 4th and 5th, right after Election Day. But there are a couple of property tax-based ballots in Florida that I know we've been tracking.

13:57Hannah Kramer: Tell us a little bit about that. I think the main one is Amendment 3, which would be cap the homestead exemption property tax in Florida. It strikes me as shades of California's Prop 13 from years ago, which still is in effect and capped property taxes. And right now, I think the ongoing warning about it is, OK, we're going to have to lay off police officers and close libraries because it's going to reduce revenue, everything else. And that was said in California, too. And to some degree, it happened. The other thing I think is the warning from California is Prop 13 was just loaded with unintended consequences.

14:31So one of the things it did was like all the towns wanted car dealers because you couldn't get the property tax and now you had to get sales tax. And so to this day in Southern California, there's a little too many of these big giant car lots or strip malls became very popular and maybe kind of adjusted the landscape. So right now in Florida, it needs a 60 % threshold to institute attacks by ballot in Florida, and it looks well short of it right now. But there's still some time left, and we'll have to see. Okay, so across the country, we're sort of tracking this tide of YIMBYism, right, of pro-building sentiment.

15:07How much are you seeing real estate issues affect these local and state races? YIMBY, I think, is now morphing into abundance, right, which is a little bit more of a formal approach. And I think we're beginning to see it, and you're starting to see some loosening. In California, I think one of the effects is a lot of recent changes to allow more density in backyard ADUs, things of that nature. I think the thing of what abundance really is driving at, and I don't think it's there yet, a lot of it's been held in abeyance because Trump in the midterm and it just sort of puts a different cast on everything.

15:42One of the things I think we'll see is the notion of sprawl. I think a lot of what abundance really is is making sprawl okay. And walking back from decades of, it's been an article of faith among a lot of people, including progressives in many cases, especially metro progressives, this sprawl is bad. And density is good. And density near transit is what we have to do. And I think we're, abundance is starting to get to the point where we might need some whole new cities. We might need to kind of get beyond the existing borders. And I think it's an attempt to make that okay. We'll see. I may be wrong on that.

16:15But I got a feeling that's what's going on and we won't see that for another couple cycles, at least until Donald Trump's gone.

16:22Hannah Kramer: It's an interesting read on kind of the abundance question. But a lot of, you know, people's drive towards wanting this being turning towards a little bit of pro-building sentiment towards this abundance, you know, notion is about housing. Right. And I'm wondering about commercial issues, too. You know, we have seen data centers become such a flashpoint. You mentioned that in regards to Ken Paxton earlier. Are there any other races or candidates where you've seen the data center question kind of become meaningful in their electability? I think it did play out in Texas, and Paxton did have to react to that.

16:59And he's not one to do that, you know, all that easily. He's a stand-your-ground sort of politician. But, I mean, he could see it. And I think at least for now it's like, okay, let's let that cup of coffee cool a little. And so that's one where you're seeing it. I think generally it did hit the Wisconsin governor's race recently. I really don't see it much in California. So I'm not seeing it too much in this election. But again, you know, we're in a strange era of politics. We have a president who kind of dominates news cycles and everything else. And sometimes you just can't get to this through all of that.

17:31And I think where, especially these last couple of weeks, that's what this gets to be. And to close this out, you know, real estate has not been super effective in all of these races at turning the tide. What do you think might change that? Or is there anything that could change real estate's influence in? You know, that's a good question. And, you know, some of that you need to have good trade groups. Right. And I think some of them, like in L.A., I know that was lacking. Something coming out of the pandemic, everyone had kind of lost their muscle memory on that stuff. And that's when ULA went through.

18:06And you need to trade groups because you need to hire someone to say it because as a business operator, you don't want to say it. And then you get the enmity with the elected official and everything else. I don't know if real estate is a little resistant on this because it's a bunch of independent-minded characters who tend not to work all that cooperatively. But that's what those trade groups are for. And I will say this, the billionaire's tax in California, which has garnered a lot of opposition now, an organized opposition. And as an example, I think, now, I guess by class, billionaires opposing it, but broader general business interests have opposed it.

18:45And they've kind of done everything that the real estate industry in LA didn't do on Measure ULA. And so I think there is some awakening of that, but I think they've really got to sharpen their pencils on that. All right.

18:57Hannah Kramer: Jerry Sullivan, thank you so much. You're welcome. Thank you.

19:04Hannah Kramer: Lila, you have an incredibly colorful story for us today that I know you've been thinking a lot about. So tell me about your latest story obsession.

19:14Lilah Burke: So two New York City real estate players got into physical blows at the Amman. Okay, tell us who is involved in this alleged fight and why this happened. Okay, so this story comes to us by way of a lawsuit from attorney Leo Jacobs. Now, to set the scene, the Amman Club, and it's an exclusive private club at the top of the Crown Building on Fifth Avenue. Initiation fees are$236 ,000, and that's on top of yearly annual dues, which are$15 ,000. Okay, so Leo Jacobs, he's an attorney who represents a lot of these big real estate clients, the Chitrites, Moynian. He is kind of like a brash talker. He's a former personal injury attorney.

20:06Lilah Burke: He's not a white shoe kind of guy.

20:09Hannah Kramer: No, he's a really colorful character, very funny to talk to. And I think that comes across a little bit in this lawsuit as he was writing it, right? But tell us more about the incident.

20:17Lilah Burke: So Leo says in this lawsuit that he is at the Amman Club minding his own business. He says, May 10th, 2026, Mother's Day. I was seated in the club's cigar lounge, smoking a cigar and engaging no one. Another member of the club approached me unprovoked and struck me across the left cheek with an open hand. Leo gets struck again and then says, having absorbed two unanswered strikes and reasonably believing that a third was imminent, petitioner rose and responded with a single blow in self-defense, ending the assault.

20:51Hannah Kramer: Wow, that is one way to end a fight. I would say violence is never the answer, but first of all, who is the person that he got in this fight with?

21:02Lilah Burke: Okay, so the other person who allegedly struck Leo Jacobs is Alex Ajmi. Ajmi owns high-end real estate in New York, Chicago, L.A. He's a prominent figure in the Syrian Jewish community. He's also very notable for having pled guilty to money laundering in 1996. There were allegations that he was helping to cover up$22 million routed for the Cali cocaine cartel in the 90s. And it was through this Connecticut brokerage, which ended up being a front for the FBI. He got stung by this, spent 44 months in jail, was pardoned by Donald Trump in 2021.

21:42Hannah Kramer: And I mean, the Ajme's are pretty well known in the real estate community. We've done other stories on, you know, their deals and their various real estate empires. But why the heck would Leo Jacobs and Alex Ajme get in a fight? Like, do we know anything about the source of the conflict?

21:59Lilah Burke: No, we don't really know why they had this fight. I mean, we can speculate there There was a case involving both of them a few weeks prior. You know, they're involved in these deals. But both of them were banned by the Amman, which was the source of Jacob's lawsuit. You know, he wants to be reinstated. He felt like he didn't have an opportunity to tell the story as he saw it. You know, he says he only struck Alex in self-defense. But he has since withdrawn the lawsuit. He says that he and Alex are friends. He also told me that initial reporting about his height and weight was slightly off. We initially reported that he was 6 '3".

22:38Lilah Burke: He told me he was 6 '1". So got to respect that. I don't see height personally, but I respect him for coming forward with that.

22:47Hannah Kramer: I just think it's really crazy that, you know, this lawsuit is it's not even, you know, Jacobs versus Ajmi. It's really, Jacobs versus the Amman Club, which I think says something interesting about, you know, kind of how valuable having these super she-she private club spaces are to these guys. At the same time, if getting access to that club is so important to you, you should be more careful not to get in fights in there.

23:11Lilah Burke: I mean, you have to kind of, I think, maybe understand where the Amman is coming from. If two people are coming to blows in your cigar lounge, that's probably messing up the vibes for your other, you know, very wealthy celebrity clientele.

23:24Hannah Kramer: I think the mystery here is still what the source of this fight was. So if you've heard anything, write us a note. Let us know. We're very curious to understand the source of all the drama.

23:35Lilah Burke: Or if you hear of any other, you know, physical fights, private club fights, bar fights going on between real estate players. I personally want to hear about them. Absolutely. And I think all of you guys do, too.

23:50Lilah Burke: So why don't we start our headlines in Florida? Hannah, you have a story for me? I do.

23:54Hannah Kramer: So our colleague Lydia Dinkova, who covers a lot of multifamily throughout the South Florida market, she recently has been covering some trouble that developer Aurelio Torialba has gotten into.

24:07Lilah Burke: Okay, tell me about that.

24:08Hannah Kramer: So Aurelio Torialba and his MG developer really made their name building these boutique resi projects. throughout the South Florida area, especially in Coral Gables. A couple years ago, though, he starts to pivot the business or add a number of multifamily projects into his pipeline. In a pretty short course of time, he put something like 2 ,000 units of multifamily housing into the pipeline, but he does it kind of at just the wrong time, right? As we've covered in other stories, you know, as rates started to rise, as construction costs have gone up, that has put a lot of multifamily developers in hot water.

24:45Hannah Kramer: water. And in South Florida specifically, we've also just had this turn in the market, right, where, you know, rents were rising so spectacularly. They're not rising at the same pace now. There were a lot of multifamily deliveries that were coming onto the market, you know, sort of just after Torielba put these projects into the pipeline. And so that's put him in a really tough position now where, according to Lydia's reporting, he has 14 lawsuits from 11 lenders looking to get something like$81 million back from him. Wow. That's a tough situation. It is. It's a tough situation to be in. You know, I'll give him a little bit of credit for speaking candidly with Lydia at this point.

25:23Hannah Kramer: A lot of developers, when they start to see these foreclosures, they really sort of shut down. So it'll be interesting for us to see whether or not Roy Alba, who's now again in this multifamily space versus the resi space he was in before, can sort of figure out his way through or whether some of these projects end up, you know, know, going back to their lenders. All right, let's jump back to New York. Tell me about the plaza.

25:45Lilah Burke: Yeah, so the plaza hotel of Eloise's Home Alone 2 fame is closing its doors for four whole years. Why? It's for facade renovation. The facade is very iconic. It's very beautiful. They're redoing it, but they're closing the hotel. They're closing retail. Condo owners will be allowed to stay, but your building is getting its whole facade reworked. It doesn't sound very fun and attractive to me.

26:14Hannah Kramer: Yeah, I imagine that would be kind of challenging if you're a condo owner to still be, you know, living normally in your unit. I wonder if this will end up impacting any of the condo prices or sort of the resale value for some of those condos.

26:26Lilah Burke: But yeah, I mean, it's hard to sell, I'm sure, right now. I'm also, you know, four years is a long time to close the Plaza Hotel and the retail that is based there. Yeah.

26:35Hannah Kramer: And the plaza has been owned by a lot of famous owners in the past, Donald Trump among them, but it's owned by the Qataris right now. Is that right? Yes.

26:45Lilah Burke: It's owned by Qatari-based Katara Hospitality and operated by Fairmont. So we'll have to see what their plan is.

26:52Hannah Kramer: Okay. And in our last headline for the day, we'll take it back to politics briefly. Friend of the podcast and Compass agent Jason Haber and the team at the American Real Estate Association are launching a new effort to mobilize New Yorkers around real estate issues. So they've launched this 501c4 called Built for New York with the goal of organizing homeowners, multifamily tenants, landlords, all under, you know, these real estate issues. It's kind of a diverse group that they're trying to go after, right? Everybody in New York interacts with real estate in some way or other. So I'll be watching to see, you know, which issues Haber and his team identify as kind of the most accessible to this big group and then to see how well they can really organize to get support for some of these real estate issues.

27:41Lilah Burke: Yeah, one thing I thought was interesting was that Haber described, you know, sort of that real estate is kind of behind the ball when it comes to donations and funding for politics. But he also said that one of the main things the group will focus on coming up is trying to get an open primary in New York. New York, you can only vote in the Democratic primary, which is really the main primary. If you are a registered Democrat, he says he's talking to many registered independents. I don't know how that's going to go in New York, but we'll see. Yeah, it's an interesting effort.

28:12Hannah Kramer: Not sure how much ground they'll be able to get, but we'll be watching either way. And that's our show. Thanks for listening. We'll see you next week. Our script today was written by Lila Burke and Hannah Kramer, edited by Kara Ivan Press, and our in-room producers were Mary Jaduk and Ushu Sukai. Our sound engineer and post-producer is Mila Miller.