Finance  ·  Industry

Frustrated With Trump, Starwood’s Sternlicht Cheers Investments Abroad


Donald Trump may enjoy the support of a handful of his former peers among the New York City real estate club. (Here’s looking at you, Steven Roth and Richard LeFrak). But count Barry Sternlicht out, thank you very much.

Although Sternlicht has been a friend and golf buddy to The Donald, the Starwood (STWD) Capital Group founder and chairman spoke disdainfully of the president at an industry forum dedicated to real estate investment trusts hosted by New York University‘s Schack Institute of Real Estate.

SEE ALSO: Kayne Anderson Adds Lee Levy From Goldman Sachs to Lead CRE Debt Platform

“Some of it is rational, but a broken clock is right twice a day, and that’s about the right strike zone for him,” Sternlicht said of Trump’s policy judgement.

As would befit the leader of a real estate company with more than $60 billion under management, Sternlicht stuck to throwing darts at the money sense of his old friend’s White House. It was rich material: The two-year-old Trump administration has borne no shortage of unorthodox developments in economic policy. (Viz. the president’s unusually aggressive trade stance and his vocal frustration with his own hand-picked Federal Reserve chairman, Jerome Powell—including thoughts of trying to replace him as Axios reported this week.)

But to Sternlicht, Trump’s most downright unusual tug on the economy’s reins came with the 2017 tax reform law.

“I didn’t really understand how we could come up with a $300 billion stimulus package on top of an economy that was already moving when Republicans got into office” in 2016, Sternlicht said. “Remember that with the collapse of the financial system [in 2008], the first [stimulus] package was $800 billion, and we had a 10 percent unemployment rate.”

Today, with the proportion of frustrated job-seekers below 4 percent, large-scale stimulus presents a serious inflationary danger, Sternlich warned.

“This was a serious morphine injection into an already moving economy. If the economy wasn’t popping now, we would be in serious trouble,” he said

But on other policy topics, the global investor praised the president, declaring his appreciation for Trump’s willingness to wage a trade war against China.

“The fight in China is a worthy fight,” Sternlicht said. “I’ve owned a company that had 50 percent import taxes on [bringing] its goods into China. [The U.S.] just doesn’t do that to companies.”

Even if Republican lawmakers have taken a retrenchment stance towards international trade, however, some of Starwood’s most promising work has come offshore of late.

“We recently bought assets in Milan…one of which was leased to a co-working company, that you can guess which one it was,” Sternlicht said. (Note: WeWork (WE) is Commercial Observer’s official guess.) “We’re going to flip it at, like, a 70 percent [return].”

“Seventy? As in, seven-zero?” asked Citigroup (C) real estate executive Michael Bilerman, who moderated the conversation with Sternlicht.

Sternlicht responded in the affirmative.

“That’s good, for the students in the room,” Bilerman quipped. “That’s a very good [return].”