Private equity and other major investment firms have paid more attention to Joe Biden than President Donald Trump in terms of the election cycle, campaign applications show, despite the potential for higher taxes.
And while some companies with a strong focus on real estate are constantly running to the candidate they have chosen, at least one company is resisting the trend.
This is largely thanks to Stephen Schwarzman, chairman and CEO of a global investment magnate. He has increased his political donations more than fivefold since the general election in 2016 – in this election cycle alone, he spent $ 27 million on campaign donations, including the Trumps.
However, others at Blackstone, which has $ 564 billion in assets under management, are putting their weight on Biden.
Company President Jonathan Gray and his wife Mindy hosted a virtual fundraiser for the former vice president in July. Tony James, executive vice president of Blackstone, meanwhile held a big money for Biden in June. According to Bloomberg News, James is also considered the best candidate for a position in the Biden cabinet. (James allegedly rejected the Obama administration’s offer to serve as Secretary of Commerce – instead becoming Secretary of the Treasury.)
Sources familiar with Blackstone’s internal politics have pointed out that while Schwarzman has made large donations to Trump, a lifelong Republican is far surpassed by Biden’s donors in his own company.
A Blackstone spokesman declined to comment.
According to a survey by the non-partisan group Center for Responsive Politics, managers and other employees of private equity companies have donated more than $ 21 million to the Biden campaign and external groups supporting the Democratic candidate. By contrast, the industry has provided President Trump and campaign groups with only $ 3.6 million in this election cycle, according to the same figures.
Among the world’s largest real estate investment companies, Schwarzman’s company is one of the outliers. In addition to Blackstone, who made hay in the last recession and crushed some feathers by sweeping rents for one family, some other prominent players, including Brookfield Asset Management and Barry Sternlicht’s Starwood Capital Group, were more modest in giving them.
While Brookfield remains active in state politics and is one of the largest single donors to New York Governor Andrew Cuomo, investment giant Candian has made limited donations to political campaigns at the federal level.
The biggest gift from the Brookfield CEO, which he received from John Stinebaugh, who oversees the company’s debt funds in the infrastructure sector, was $ 10,000 for the Democratic National Committee. Other employees of the asset management company made smaller donations to the Biden and Trump campaigns.
A Brookfield spokesman did not return a request for comment.
Sternlicht, chairman and CEO of Starwood, who has not contributed to any campaigns, 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 said The real solution in May interview. “I did not participate in the administration.” I am pro-choice and the environment is another very important issue for me. It’s complicated.”
However, he also noted that the positive for him and his company under Trump’s president is that the federal government is no longer “demonizing” businesses.
“Under Obama’s rule, I argued that we were morally corrupt when we succeeded,” Sternlicht said.
Meanwhile, at least one executive at Starwood, who has approximately $ 60 billion in assets under management, has donated modestly to Biden’s campaign. Jeffrey Dishner, the global leader in real estate acquisitions, donated $ 2,800 to the Biden Victory Fund in June. Another top executive, Madison Grose, Starwood’s chief attorney general, gave $ 5,600 to U.S. Senator Richard Blumenthal of Connecticut, a Democrat.
A Starwood spokesman declined to comment.
And while some private equity firms may prefer the certainty of the Biden presidency, for others that are heavily invested in real estate, the possibility of higher taxes and canceling 1,031 bills is a bitter pill that others relying on real estate should swallow, said Jon Woloshin, head of real estate. UBS Wealth Management department.
Several other private equity firms with real estate investments, including Bain Capital, which manages more than $ 100 billion in assets, support the Biden campaign and democratic political committees. Bain executives, who also supported Clinton over Trump in 2016, gave more than $ 5 million to Democratic groups and Biden’s campaign this year.
Baina’s spokesman declined to comment.
As with private capital, the real estate industry devoted more overall
Biden than Trump this election cycle. Industry sources say it is driven by a desire for greater stability in capital markets. Despite Republicans’ reputation for more business support, the trade war with China and the uneven and chaotic response to the coronavirus pandemic have shaken many investors.
However, private equity firms with large real estate investments have reasons to be cautious about both campaigns.
Some of the policies announced by Biden could have a negative impact on their business, including the exclusion of the interest-bearing rule – which would tax profits rather than capital gains rather than income – and exchanges of a similar nature. Trump left the interest rate clause untouched during his tax review in 2017, but has since said he would like to remove it.
“The Trump administration would be better for commercial real estate investors than the Biden presidency, but I don’t know that this is an absolute negative negative result,” Woloshin said, adding that the Biden presidency would be a “sub-optimal result” for them.
“Investors say, ‘Let me know the rules of the game so I can play’ – everyone just wants clarity,” he said.
The candidates also took very different positions on other issues, including government spending, foreign trade and climate control, which could have a wave effect throughout the investment climate.
Instead of selecting a candidate on the basis of policies that will be favorable to his business, investors can support a candidate they believe will lead to a return to normalcy and predictability – while hoping for a clear outcome in November rather than a challenged election that could send markets into disarray.
However, more companies can prepare for this possibility.
“It’s not a Biden or Trump victory – it’s about what happens if the election is called into question,” said Mukang Cho, CEO of Morning Calm Management, which owns and manages more than 5 million square feet of U.S. commercial property worth approximately $ 800 million.
“If that happens,” Cho said, “the capital markets will have a sell-off, a protracted period of storms, and it will be generally bad for every sector – except for short sellers.”