Name: Related’s Stephen Ross, Trump Crony, Has a Giant Coronavirus Hypocrisy Problem
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Related’s Stephen Ross, Trump Crony, Has a Giant Coronavirus Hypocrisy Problem

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On April 6, Jeff Blau, the CEO of Related Companies, the behemoth real estate developer, appeared on CNBC’s Squawk Box with Andrew Ross Sorkin to discuss the challenges Related’s retail tenants had in early April making their rent payments because of the coronavirus lockdowns.Related, one of Manhattan’s largest real estate developers, once as “the Harvard of real estate,” owns the swanky new $25 billion Hudson Yards development on Manhattan’s West Side and the Time Warner Center at Columbus Circle. Related is also one of the of affordable housing in the United States. In sum, according to Blau, Related controls a real estate portfolio worth just shy of .Stephen Ross, a longtime friend of Donald Trump’s, with an estimated net worth $10 billion, according to Forbes, is the founder of Related. Ross, a tax attorney who was from his job at Bear Stearns in 1970, also owns of the Miami Dolphins football team, controls a $5 billion investment fund, and is the —more than $350 million—to his alma mater, the University of Michigan, where the business school bears his name. The reported in 2017 that Ross owns “more than half” of Related.In his appearance on CNBC, Blau told Sorkin that 88% of Related residential tenants had paid their April rent, that 95% of its commercial tenants had paid the April rent, but that only 26% of Related’s retail tenants had paid the April rent. He then went off on a bit of a rant about how it was not okay for tenants not to pay rent or to write “blanket letters” to landlords, such as Related, about why they would not be paying their rent because of the coronavirus lockdowns. He said he would not accept excuses about not paying rent from tenants who were well capitalized. He then talked about how Adidas, the big athleticwear company, had suffered “public shaming” in Germany after it wrote some landlords initially that it would not pay its rent because of forced store closing, due to the spreading virus. “It’s a whole ecosystem,” Blau said. “The people that can pay need to pay. Landlords need to help out those that can’t, and then the banks need to help out those landlords that are hurt by people that couldn’t pay the rent.”Ah, the hypocrisy. Soon after Blau’s CNBC appearance, the , among others, reported that Equinox, the high-end health club with more 300 locations globally, would not be paying April rent. Equinox is—wait for it—owned by Related Companies, which it bought for around $500 million in 2005 and then, years later, sold minority stakes to outside investors. Equinox has a new, luxury hotel at Hudson Yards—the first of several hotels planned for Houston, Los Angeles, and Chicago in the coming years—and a swishy health club there. Equinox also owns SoulCycle, Blink Fitness (a health club designed for the non-triathlete crowd), Pure Yoga, and Precision Run, an interactive exercise experience. Not only would Equinox not be paying its rent, it also wrote letters to vendors , on March 18, telling them it would not be making “invoice payments until further notice.”But there’s even more hypocrisy. In the first week of February—at virtually the top of the market—Ross, Blau, and Related Companies closed on a major capital investment into the Related Companies from Saudi Arabia’s sovereign wealth fund. The Saudis $320 billion Public Investment Fund, known as PIF, is chaired by Crown Prince Mohammed bin Salman, another and the man many believe is responsible for the shameless 2018 killing of journalist Jamal Khashoggi. Related is a private company and PIF is a private investment fund; neither is obligated to comment publicly on the investment—which has not previously been reported; Blau did not mention it during his CNBC appearance—and neither organization would comment to me on the record. A spokesman for the Related Companies declined to comment on the PIF investment and Kevin Foster, PIF’s New York–based head of communications, did not respond to a request for comment about the investment in Related.Most PopularBut people familiar with the investment confirmed to me that it was in the form of convertible debt, convertible into 15% of the equity of Related and that it will be used for “general corporate purposes.” I could not learn how much the Saudis invested in Related in exchange for its 15% stake in the company, or at what the value the Saudis agreed to place on Related when it made the investment. But it’s likely that the PIF invested hundreds of millions of dollars into Related given that the deal closed at the top of the market and that Related itself is likely worth tens of billions of dollars, based on Ross’s net worth and his majority stake in the company. PIF has been on a tear in recent weeks, making investments in a variety of companies that seem to be in distressed straits, due to the coronavirus. PIF has recently agreed to invest in , and a bunch of including Royal Dutch Shell, Total, Repsol, Equinor, and Eni. According to the , it also recently agreed to buy Newcastle United F.C., the British soccer team, for around $375 million.Ross has known Trump for more than . He ran into serious flak last summer when he hosted a multimillion-dollar fundraiser for Trump in the Hamptons, charging as much as $250,000 a pop to have a picture taken with Trump and to participate in a conversation with him. Many Equinox and SoulCycle members publicly complained about Ross’s Trump fundraiser and threatened to cancel their memberships. As I last August, many on Wall Street concluded that Ross’s real motivation for holding the fundraiser was to insure the controversial EB-5 visa program, which allows rich foreigners to get a permanent visa in exchange for making an investment of at least $500,000 in an American business, got extended rather than expire at it was supposed to do at the end of September 2019. Ross succeeded in his mission; Trump signed a law extending the program for a year, until September 2020. Ross’s Related Companies is one of the bigger users of the EB-5 program to raise cheap equity.And Ross got more public flak when it was revealed, by the , that after Ross participated in a conference call Trump had with business executives, Trump decided to include gyms on the list of businesses that can open first during “phase one” of Trump’s controversial efforts to re-open the economy. In Trump’s , “Guidelines for Opening Up America Again,” the president wrote that as long as gyms “adhere to strict physical distancing and sanitation protocols,” they could reopen. The Daily Beast quoted an incredulous Laurence Gostin, the director of the O’Neill Institute for National and Global Health Law at Georgetown University, “Gyms are like a petri dish. People are close to one another, they’re sweating, they’re coughing and sneezing, they’re touching multiple surfaces, they’re sharing equipment, they’re indoors. Literally all of the heightened risk factors for COVID transmission are all entwined together in a gym.”News that Trump seemed to be favoring his friend Ross, and his struggling health club empire, is no surprise of course, given Trump’s eagerness to reward his rich friends. But it still lit up the Twitterverse. Frank Rich, the New York magazine writer and Hollywood showrunner, about Ross, “This Trump crony also owns @_HudsonYardsNYC. How long till we learn he got a bailout?” Probably not for awhile Frank, given the major cash infusion that Ross just got from the Saudis.More Great Stories From Vanity Fair— Does Have a Case?— In the COVID-19 Crisis, —And Bill Ackman Stepping Up— Can You Beat COVID-19 Without a Lockdown? — With the Times Reprises Its 9/11 Storytelling Role— How Long Will the Last?— From the Archive: The Who Battled EbolaLooking for more? for our daily Hive newsletter and never miss a story.The freshest-and most essential-updates from Washington, Wall Street, and Silicon Valley.

On April 6, Jeff Blau, the CEO of Related Companies, the behemoth real estate developer, appeared on CNBC’s Squawk Box with Andrew Ross Sorkin to discuss the challenges Related’s retail tenants had in early April making their rent payments because of the coronavirus lockdowns.Related, one of Manhattan’s largest real estate developers, once as “the Harvard of real estate,” owns the swanky new $25 billion Hudson Yards development on Manhattan’s West Side and the Time Warner Center at Columbus Circle. Related is also one of the of affordable housing in the United States. In sum, according to...

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William D. Cohan

Vanity Fair is a monthly magazine of popular culture, fashion, and current affairs published by Condé Nast in the United States.  The first version of Vanity Fair was published from 1913 to 1936. The imprint was revived in 1983 and currently includes five international editions of the magazine. As of 2018, the Editor-in-Chief is Radhika Jones.

Related’s Stephen Ross, Trump Crony, Has a Giant Coronavirus Hypocrisy Problem

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