Everyday, it becomes clearer: the COVID-19 pandemic is hitting poor, working, and marginalized communities the hardest.
Millions of workers – especially low-wage retail, food service, hospitality, and care workers – have faced the terrible choice daily between going to work and risking their health, or staying home and risking their paychecks. Many other workers don’t even have that choice, with around 30 million people in the US filing for unemployment in the past six weeks.
But billionaires don’t face these same problems. As tens of millions have lost their jobs over the past two months, billionaire wealth soared by a whopping $282 billion between March 18 and April 10, according to a new study from the Institute for Policy Studies. And while finding enough space to wait out the pandemic is something many struggle with, billionaires have been escaping to their second (or third, or fourth) homes to ride it out in luxury – all while they position themselves to further profit off of this crisis.
Clearly, the COVID-19 pandemic is not the “great equalizer” that some predicted.
Here, we look at how some billionaires – hedge fund managers, real estate developers, etc – have taken to social distancing in wealthy enclaves like Palm Beach and the Hamptons – and of course, their super yachts.
Palm Beach, Florida
If you want to see a quintessential billionaire enclave, look no further than Palm Beach, the 18-mile Florida island, sitting on the rim of the Atlantic Ocean, home to a slew of private equity and hedge fund executives.
Palm Beach was recently in the news when the New York Times reported on April 7 that hedge fund billionaire Ken Griffin “secured sumptuous Florida quarters” for stock traders from Citadel Securities – a “sibling” to his hedge fund, Citadel – to hunker down in: the five-star Four Seasons hotel in Palm Beach (where some rooms are currently priced at up to nearly $3,000 a night).
Citadel Quarantines at the Four Seasons Palm Beach to ride out the storm! https://t.co/OZ5V9DivTW
— Alison Galardi (@alibrite) April 8, 2020
For Griffin, this is just a small slice of real estate empire. He owns the most expensive homes in both Miami and Chicago (where his hedge fund is based), and he bought a $122 million mansion in London – the priciest home sold there over the past decade. In 2018, he bought the most expensive home ever sold in the US – a $238 million New York City penthouse. It was the cherry on top of what CNBC called Griffin’s “$700 million global real estate shopping spree, believed to be the largest ever for a U.S. billionaire.”
If that wasn’t enough, Griffin also paid $500 million for just two pieces of art in 2016.
Griffin owns a 17-acre space, nearly empty lot on South Ocean Boulevard, also known as West Palm’s “Billionaire’s Row.” According to the New York Post, his neighbors there include notorious Wall Street bigwigs like Stephen A. Schwarzman, Paul Tudor Jones II, and Steven Schonfeld.
Schwarzman is the head of Blackstone, the world’s top private equity firm, overseeing $571 billion in assets. Schwarzman – a political ally of, fundraiser for, and big donor to Donald Trump – is worth $17.5 billion. Tudor Jones founded the hedge fund Tudor Investment Corporation, and is worth $5.1 billion. He also sits on the board of the Palm Beach Civic Association, alongside a slew of elites, including Trump allies Rudy Giuliani and billionaire Stephen Ross.
Another hedge fund billionaire, Steven Schonfeld, recently paid $200 million to buy Palm Beach’s most expensive mansion.
When fellow billionaire Jeff Greene – a developer who is Palm Beach’s top landowner – heard about how Griffin put up his stock traders at the Four Seasons, he “fired off emails to his contacts in the financial industry offering hotel rooms for alternate trading sites of their own.”
“I sent them all emails saying, ‘I have a hotel right next door. Could you use a trading floor?’,” the NYT quoted Greene.
(It should be noted that not everyone lauded the Wall Street takeover of Palm Beach’s fancy hotels. The NYT reported that a neighbor to the Four Seasons said “it was difficult not to think about the contradiction between the traders working at a five-star resort and people unable to ride out the pandemic in similar comfort.”)
Greene, worth $3.7 billion, owns a home on Palm Beach’s Billionaire’s Row near the likes of Schwarzman, Tudor Jones, and Schonfeld. He made a big chunk of his fortune off the 2007-8 housing crash: “[Greene’s] biggest win came when he bet that the subprime mortgage bubble would burst,” wrote the Palm Beach Post. “In 2006, Greene bought credit default swaps that he later cashed in for a profit of $500 million to $800 million.”
Greene also spent tens of millions on failed U.S. Senate and gubernatorial Democratic primary runs in Florida.
Greene’s properties stretch beyond Palm Beach. In 2014, he listed for sale a $195 million, 53,000-square foot Beverly Hills mansion that included “25 private acres, a 3,000-bottle wine cellar, a bowling alley, a state-of-the-art theater, a vineyard and much more.”
Astonishingly, Greene declared in 2015 that “America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a maller, better existence.”
A host of other billionaire investors have second, third, or fourth homes in Palm Beach. Nelson Peltz, who heads up the hedge fund Trian Partners, owns a $136.4 million oceanfront estate (it’s called “Montsorrel”). Peltz, whose hedge fund portfolio includes Wendy’s and P&G, recently hosted the priciest-ever Trump reelection fundraiser there. The New York Post reported that Peltz is looking to cash in on the current crisis.
Henry Kravis, who co-founded the private equity firm Kohlberg Kravis & Roberts, is also a big name in Palm Beach. When he’s not raiding and bankrupting children’s toy stores, Kravis, worth $5.6 billion, can visit Palm Beach’s Kravis Center for the Performing Arts, named in honor of his father, Raymond Kravis. Kravis also sits on the board of the Palm Beach Civic Association.
In addition, the wealthy CEO of the Mount Sinai Health System and the president of the Mount Sinai Health Network took some heat for social distancing from their homes in Palm Beach while their hospital system in New York City “seems to be imploding” under the weight of the coronavirus pandemic.
The Hamptons, on the eastern end of Long Island, is a storied vacation spot for New York City’s rich and famous. Despite only being April, these elites have been clamoring to leave the city to escape the spread of coronavirus and hunker down in the luxury of – what are typically – their summer homes.
One peninsular stretch along Meadow Lane in Southampton, NY has long been dubbed “Billionaire Lane” for its concentration of high dollar beachfront properties and wealthy residents. The area, which Curbed called “where the 1% of the 1% summer,” is one of the most expensive addresses in the county and even has its own helipad to help vacationers reach their mansions even faster. A helicopter commute from Manhattan only takes 40 minutes.
Residents of “Billionaire Lane” have included Wall Street bigwigs, CEOs, celebrities, and the late David Koch. Billionaire hedge fund manager Daniel Och vacations on a four acre estate worth $26.5 million, while fellow hedge fund billionaire Chase Coleman owns a five acre estate worth $32.5 million.
Private equity billionaires Leon Black and Henry Kravis (yes, that same Henry Kravis from the Palm Beach section above) each own several acres of oceanfront property, while Loews CEO James Tisch of the billionaire Tisch family purchased the famous 8,000 square foot home featured in the film “Something’s Gotta Give” for $41 million.
— ForbesLife (@ForbesLife) June 19, 2014
The strip is also a second home to several celebrities, including designer Calvin Klein who tore down one mansion to build a new $75 million one more in line with his style, and Studio 54 co-founder and hotelier Ian Schrager who has owned his four acre property since the 80s.
Indeed the Hamptons are so famously connected to wealth and privilege that the destination was name-dropped in a viral appearance by Chamath Palihapitiya, founder and CEO of Social Capital, on MSNBC as he railed against bailing out billionaires and hedge fund managers:
“Who cares? Let them get wiped out. Who cares? They don’t get to summer in the Hamptons? Who cares?”
The U.S. shouldn’t bail out billionaires and hedge funds during the coronavirus pandemic, Social Capital CEO Chamath Palihapitiya says. “Who cares? Let them get wiped out.” https://t.co/dIbizumtqG pic.twitter.com/u8BSVvr0B1
— CNBC (@CNBC) April 9, 2020
Now, the Hamptons, already rife with the vacation homes of the 1%, are experiencing an influx of even more wealthy individuals looking to ride out the pandemic in a posh setting, taxing local resources during what is typically a slow season.
Joe Farrell, a wealthy Hamptons property developer, provided some insight into the rush of New York’s rich to find refuge when he told the New York Post that he rented a sprawling property nicknamed “Sandcastle” to a fellow New Yorker for $2 million after it was listed for just one day.
Farrell further disclosed that the six month rental, which set a new price record for the area, went to a “textile tycoon and his family who were stuck in Manhattan and wanted to leave the city on a day’s notice.” He noted that this was “a COVID situation — not a normal summer rental.”
The real estate listing for the estate reveals an astounding number of amenities, including: 10 bedrooms, 15 bathrooms, an elevator, baseball field, tennis, squash, racquetball, basketball and volleyball courts, two-lane bowling alley with full bar, a rock-climbing wall, DJ booth and recording areas, 10-seat theatre, pool and hot tub, spa suite with sauna and two hydraulic massage tables, and a skateboarding half-pipe.
While we do not know much about the “textile tycoon” who rented this estate, we can get a sense of the clientele Farrell serves from the services he offers. Farrell has several Hampton’s properties available for rent, and he boasts about flying clients between the city and their new homes in his company helicopter, or using his private jet to scoop up their stranded children. The “Sandcastle” property has been rented by numerous celebrities including Beyoncé, Jay-Z, and Justin Beiber, and was the site of a fundraiser for Donald Trump, where tickets sold for up to $250,000 each.
This rental is a window into the pampered opulence the wealthy expect to maintain in the midst of a global pandemic. However, year-long residents of the Hamptons are fed up with the city elites using their towns and villages to escape, dismissing warnings, and bringing the highly contagious virus with them. The influx during the off season for the area has created major food shortages and strained the small local hospital.
Perhaps most egregious of all, the wealthy are not exactly hunkering down in their mansions once they arrive – rather, some are out partying, as if suddenly inoculated from the virus by their well-to-do surroundings.
Rather than retreating behind the gates of private estates, some of the ultra-wealthy have taken to the high seas to weather the crisis on luxury yachts far away from the growing scenes of misery on the mainland.
Music and movie mogul David Geffen posted a photo to Instagram of his $590 million yacht captioned: “Sunset last night…isolated in the Grenadines avoiding the virus. I’m hoping everybody is staying safe” on March 28.
Outraged backlash to his post was so swift and severe that Geffen deleted his account.
Geffen, the founder of Geffen Records and DreamWorks Pictures, is worth around $8 billion. He is the wealthiest person in the entertainment industry, according to Business Insider.
The yacht where he is isolating, named Rising Sun, was originally built for Oracle founder Larry Ellison. Guests on the yacht have included Jeff Bezos, the Obamas, and a host of industry celebrities.
Geffen’s yacht, which he paid more than half a billion dollars for, even has its own Forbes page.
Forbes describes Geffen as a “luxury property aficionado” who “owns one of NYC’s most expensive apartments, a house in the Hamptons and the Jack L. Warner estate in Beverly Hills.”
He is also a huge art aficionado, having “amassed an impressive contemporary art collection, including works by Jasper Johns, De Kooning and Jackson Pollock.” Geffen has one of the most expensive private art collections in the world, estimated to be worth around $2.3 billion as of 2018 by Whitewalls, an art industry website.
(Oh yeah – that $500 million that hedge fund Ken Griffin manager paid for two pieces of art, mentioned above? They were sold to him by David Geffen).
In 2017, Geffen announced a $150 million donation to the Los Angeles County Museum of Art – its largest-ever gift – to help build a new building that would be called the “David Geffen Galleries.”
The public health and economic fallout of the COVID-19 crisis is set to magnify in the weeks and months ahead, and the devastation will likely be with us for years to come. As many in corporate America continue to rake in profits off of the crisis from their luxury homes, and as tens of millions of people in the U.S. suffer, the battle over what a post-COVID U.S. will look like, and whether the interests of billionaires will be prioritized over those of working people, will only intensify.