Where real estate’s investment giants stand on Biden vs. Trump

Private equity firms have given more to the former vice president, despite the potential for higher taxes

From left: Joe Biden, Starwood Capital's Barry Sternlicht, Blackstone's Stephen Schwarzman and Donald Trump (Getty; iStock)
From left: Joe Biden, Starwood Capital's Barry Sternlicht, Blackstone's Stephen Schwarzman and Donald Trump (Getty; iStock)

Private equity and other major investment firms have donated more to Joe Biden than President Donald Trump so far this election cycle, campaign filings show, despite the potential for higher taxes.

And while some companies with a heavy focus on real estate have been keeping hush on their candidate of choice, at least one firm is bucking that trend.

The Blackstone Group, the world’s largest commercial landlord, is by far the largest single contributor to political campaigns among Wall Street firms, a Reuters review of campaign filings found.

That’s largely thanks to Stephen Schwarzman, the global investment behemoth’s chairman and CEO. He’s increased his political donations more than five-fold since 2016’s general election — spending $27 million this election cycle alone on donations to campaigns including Trump’s.

Others at Blackstone, which has $564 billion in assets under management, are throwing their weight behind Biden, however.

The firm’s president, Jonathan Gray, and his wife Mindy hosted a virtual fundraiser for the former vice president in July. Tony James, Blackstone’s executive vice chairman, meanwhile, held a big-money bash for Biden in June. James is also considered a top contender for a position in a Biden cabinet, according to Bloomberg News. (James reportedly turned down an offer from the Obama administration to serve as secretary of commerce — instead holding out to be Treasury secretary.)

Sources familiar with the internal politics at Blackstone emphasized that while Schwarzman has made big donations to Trump, the life-long Republican is far outnumbered by Biden donors at his own firm.

A spokesperson for Blackstone declined to comment.

Overall, executives and other employees at private equity firms have donated more than $21 million to Biden’s campaign and outside groups backing the Democratic candidate, according to research from the nonpartisan group Center for Responsive Politics. By contrast, the industry has given President Trump and groups backing his campaign just $3.6 million this election cycle, the same data show.

Among the largest global investment firms that specialize in real estate, Schwarzman’s firm is one of the outliers. Besides Blackstone, which made hay and ruffled some feathers in the last recession by sweeping up single-family rentals, some other major players including Brookfield Asset Management and Barry Sternlicht’s Starwood Capital Group have been more modest with their giving.

While Brookfield remains active in state politics, and is one of the largest single donors to New York Gov. Andrew Cuomo, the Candian investment giant has made limited donations to political campaigns at the federal level.

The largest donation from a Brookfield executive, which came from John Stinebaugh, who oversees the firm’s infrastructure debt funds, was for $10,000 to the Democratic National Committee. Other employees of the asset management firm have made smaller donations to both the Biden and Trump campaigns.

A spokesperson Brookfield did not return a request to comment.

Sternlicht, Starwood’s chairman and CEO, who has not donated to either campaign, has been critical of some of Trump’s policies over the past few years, including the president’s trade war with China.

“I consider him a friend, but I don’t talk to him as president,” Sternlicht told The Real Deal in a May interview. “I haven’t been involved in the administration. I’m pro-choice, and the environment is another very important issue to me. It’s complicated.”

But he also noted that the one positive for him and his firm under Trump’s presidency is that businesses are “no longer demonized” by the federal government.

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“What I objected to under the Obama administration was the thought that we were morally corrupt for succeeding,” Sternlicht said.

Meanwhile, at least one senior executive at Starwood, which has about $60 billion in assets under management, has donated modestly to Biden’s campaign. Jeffrey Dishner, the firm’s global head of real estate acquisitions, gave $2,800 to the Biden Victory Fund in June. Another top executive, Madison Grose, Starwood’s co-general counsel, gave $5,600 to U.S. Senator Richard Blumenthal of Connecticut, a Democrat.

A spokesperson for Starwood declined to comment.

And while some private equity firms may prefer the certainty of a Biden presidency, for others heavily invested in real estate, the possibility of higher taxes and the elimination of 1031 exchanges are a bitter pill to swallow for others heavily invested in real estate, said Jon Woloshin, head of real estate at UBS Wealth Management.

A few other private equity firms with real estate investments, including Bain Capital, which has more than $100 billion in assets under management, are supporting the Biden campaign and Democratic political committees. Executives at Bain, which also backed Clinton over Trump in 2016, gave more than $5 million to Democratic groups and Biden’s campaign this year.

A spokesperson for Bain declined to comment.

Similar to private equity, the real estate industry, by and large, has donated more to
Biden than Trump this election cycle. Industry sources say that’s driven by a desire for more stability in the capital markets. Despite Republicans’ reputation for being more supportive of business, a trade war with China and an uneven and chaotic response to the coronavirus pandemic have rattled many investors.

But private equity firms with big real estate investments have reasons to be cautious of both campaigns.

Some of the policies Biden has announced could have a negative impact on their business, including the elimination of the carried interest rule — which would tax profits as capital gains rather than income — and like-kind exchanges. Trump left the carried interest provision untouched in his 2017 tax overhaul, but has since said that he would like to eliminate it.

“A Trump administration would be better for commercial real estate investors than a Biden presidency, but I don’t know it’s an absolute slam dunk negative,” Woloshin said, adding that a Biden presidency would be a “suboptimal outcome” for some.

“Investors say, ‘Let me know the rules of the game so I can play’ — everybody just wants clarity,” he said.

The candidates have also taken very different stances on other issues, including government spending, foreign trade and climate control, which could have ripple effects across the investment landscape.

Rather than choosing a candidate based on policies that will be favorable to their business, investors may be backing a candidate who they believe will usher in a return to normalcy and predictability — while hoping for a clear outcome in November, rather than a contested election that could send the markets into disarray.

More firms may be preparing for that possibility, however.

“It’s not about Biden or Trump winning — it’s about what happens if the election is contested,” said Mukang Cho, CEO of Morning Calm Management, which owns and manages more than 5 million square feet of commercial real estate in the U.S. valued at about $800 million.

“If that happens,” Cho said, “capital markets will have a selloff, a protracted period of tumult, and it will be generally bad for every sector — except short sellers.”