Page 16 - Bloomberg Businessweek-October 29, 2018

Bloomberg Businessweek October 29, 2018

Colony Capital’s Trump Slump connection was to Prince Alwaleed bin Talal, his partner in
Price change since Trump’s inauguration taking the Fairmont Raffles hotel chain private in 2006. But
Alwaleed wasn’t close to MBS, and with the latter consolidat-
ing power in the kingdom, he’d be of little help to Barrack.
He eventually found his opportunity in Yousef Al Otaiba,
ambassador to the U.S. from the United Arab Emirates and
another longtime friend of Barrack’s. As the campaign heated
up, Otaiba reached out to complain about Trump’s threat
to ban Muslim immigrants around the same time as MBS’s
announcement. In the byzantine world of Gulf royalty, Otaiba
42% Apollo
is a good friend to have. He’s aligned with Mohammed bin
34% KKR Zayed Al Nahyan, the crown prince of Abu Dhabi, the larg-
est by area of the seven emirates that make up the U.A.E. The

21% S&P 500 Abu Dhabi crown prince supported MBS’s rise and had coun-
20% Icahn Enterprises seled him that a closer relationship with the U.S. was possible
14% Blackstone through improved ties with Israel.
“Confusion about your friend Donald Trump is VERY high,”
1/20/17 10/23/18 Otaiba wrote Barrack in one of several emails obtained by the
–2% Bloomberg New York Times. Barrack advised Otaiba not to pay much atten-
U.S. REITs Index
tion to rhetoric, mentioned Trump’s real estate projects in
Dubai, and arranged a meeting with the president’s son-in-
law, Jared Kushner, the published emails show. “Obviously I
would like the meeting to be arranged by you and me rather
than Blackstone,” he wrote in a separate email. (Barrack’s
experience in the Middle East was a valuable resource to the
Trump campaign and later the administration, said Blicksilver, 59
Barrack’s spokesman. “The introduction to the leaders of the
Arab world was not for political reasons but rather to form
thoughtful points of view on the issues which had plagued the
–60% Colony region for decades,” he added.)
Kushner was receptive to an alliance among Gulf coun-
Convention in July 2016, he gave it a more self-deprecating cast. tries, the U.S., and Israel, which he saw as a way to pressure
Glossing over the candidate’s financing difficulties and bank- Palestinians into accepting a peace deal. Barrack soon began
ruptcies, he said Trump had “played me like a Steinway piano.” talking up the Saudi line in public. “The United Arab Emirates
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and Saudi Arabia and Israel—in my opinion—will align as allies
A few months before the convention, with Trump’s cam- very quickly here, and the world could change for the better,”
paign still hurtling toward the nomination and Barrack talking he told Bloomberg TV in May 2016. Barrack went even further
up the candidate on cable news, Saudi Arabia’s then-Deputy toward aligning himself with Saudi Arabia later that year, call-
Crown Prince Mohammed bin Salman, better known as MBS, ing the kingdom “our longest and strongest ally” and “reli-
announced a bold plan to diversify the country’s assets in able defenders of the West’s diverse interests in the region.”
preparation for a post-oil world. State-owned Saudi Arabian
Oil Co. would sell shares to the public and use the projected At home in the Colony offices, the situation was consid-
$2 trillion in proceeds to build up its sovereign wealth fund, erably less auspicious. The company was in the middle of a
he said in April 2016. merger with New York-based NorthStar, whose chief exec-
To find, buy, and manage the assets the country would be utive officer, David Hamamoto, shared Barrack’s laid-back
acquiring with the proceeds, it would need an army of finan- demeanor.
ciers. Barrack, who’d played the same role for the Qataris, was NorthStar was a mess. It had almost quadrupled the assets it
one of many who wanted in, according to three people famil- had under management in two years by buying real estate port-
iar with his thinking. As a young lawyer working for Richard folios with little regard for quality, funded with floating-rate
Nixon’s personal attorney in the early 1970s, Barrack had debt. When rates started rising in late 2015, NorthStar’s inter-
been sent to Saudi Arabia to do work on behalf of engineer- est payments did, too. That wouldn’t have been a problem
ing and construction company Fluor Corp., which in turn led were it not for how NorthStar was structured. The firm was
to a friendship with a couple of Saudi princes. But the Saudi an externally managed trust that was required to pay a non-
royal family is sprawling and fractious, and Barrack hadn’t negotiable annual management fee of $186 million to another
done deals with the country’s sovereign fund. His principal publicly traded company, also run by Hamamoto, no matter