Monday, August 22, 2016
Learning and earning: Hasidic Brooklyn’s real estate machers
On the day before Thanksgiving, Yoel Goldman phoned one of his go-to lenders with an urgent request.
The Brooklyn developer, who heads All Year Management, wanted to score a construction loan for his Albee Square project by Monday, which gave him just one business day to make it happen.
The lender, Gary Katz of Downtown Capital Partners, reminded him of Thanksgiving. But Goldman, who is from the Satmar sect of the Hasidic branch of ultra-Orthodox Judaism, countered: "So you can't work Thanksgiving tomorrow, but you still have all of today, Friday and Sunday.'"
Katz tried an analogy. Wednesday, he told Goldman, is Erev Yontiff – "evening before the holy day" in Yiddish – and Friday is Chol HaMoed – a weekday between two holy days. For most Hasidic Jews, Chol HaMoed is an occasion for family and Talmud study, not dealmaking.
Goldman got that, and held off. Property records show he ultimately received a $25 million mortgage from Downtown Capital and RWN Real Estate Partners – on Christmas Eve.
The real estate investors who hail from Brooklyn's insular Hasidic communities are some of the industry's most active and powerful players. Over the past decade, they've spent more than $2.5 billion on acquisitions in five prime Brooklyn neighborhoods, according to an analysis of property records by The Real Deal. But unlike their Grill Room-dining, art-collecting Manhattan counterparts, they prefer to stay in the shadows, their connections to properties masked through a network of frontmen and a labyrinth of LLCs. Most have no websites, and some have never been photographed.
This immense cultural divide hasn't stopped them from transforming key neighborhoods into yuppie central, where rents and sales prices have skyrocketed. From the second quarter of 2008 to the second quarter of 2016, the average apartment sales price in Williamsburg doubled – from $668,956 to $1.3 million, according to real estate appraisal firm Miller Samuel. The average sales price in Bedford-Stuyvesant jumped 67.8 percent, to $877,225, and average monthly rents in Bushwick jumped 70.6 percent, to $2,643. Borough-wide over the same period, the average sales price climbed by 38.8 percent, to $816,827, and average monthly rents rose 26.2 percent, to $3,137, the data show.
"The Hasidic community helped create the frenzy [in Brooklyn] we have today," said Pinnacle Realty's David Junik. "They let the market explode after that."
A clandestine empire
Any Brooklynite could tell you the Hasidim are prominent landlords in the borough. But the extent of their dominion long remained unclear.
TRD reviewed every building purchase in five of the borough's fastest-growing neighborhoods – Williamsburg, Greenpoint, Bushwick, Bedford-Stuyvesant and Borough Park – between January 2006 and mid-June 2016. Over this period, 10 addresses – affiliated with one or more firms – were each responsible for at least $100 million in purchases. The analysis included only addresses where the total expenditure involved five or more separate purchases, indicating repeat bets on neighborhoods. Firms like Forest City Ratner, Two Trees Management and Spitzer Enterprises, for example, also spent big on these neighborhoods, but made fewer deals.
The 10 addresses (see chart above) were predominantly clustered in South Williamsburg and Borough Park. In Williamsburg, they include 390 Berry Street, 320 Roebling Street, 266 Broadway, 183 Wilson Street, 543 Bedford Avenue, 199 Lee Avenue and 505 Flushing Avenue. Mapping them out north to south takes you on a walking tour through the heart of the neighborhood's Hasidic enclave.
The addresses point to a who's who of Brooklyn real estate: Simon Dushinsky and Isaac Rabinowitz's Rabsky Group; Joseph Brunner and Abe Mandel's Bruman Realty; Yoel Goldman's All Year Management; Joel Gluck's Spencer Equity; Joel Schwartz; the Hager family; and Joel Schreiber's Waterbridge Capital.
One address, 199 Lee Avenue, is affiliated with an incredible 1,400 LLCs. Over the 10-year period, the mailbox hub on Hasidic Wiliamsburg's main commercial corridor is linked to 423 purchases totaling $583.5 million, the data show.
Some of the biggest deals were Goldman's April 2016 purchase of part of the Rheingold Brewery site in Bushwick for $72.2 million, and Goldman and Toby Moskovits' 2012 purchase of the Williamsburg Generator site at 25 Kent Avenue for $31.8 million. (Goldman is no longer an investor in the 480,000-square-foot Generator office project.)
Dushinsky, Goldman, Brunner and Mandel are considered the heavyweights. Goldman, who is in his mid-30s, owns a portfolio of more than 140 rental buildings. The bulk of his holdings were included in his bond offering on the Tel Aviv Stock Exchange, and were valued at $850 million, according to a recent filing. He's also looking to build up to 900 rental apartments at a 1 million-square-foot complex at the former Rheingold Brewery site. Brunner and Mandel, also in their 30s, own more than 100 buildings. Dushinsky, who is in his 40s, has more than 600,000 square feet under development, including a 500-unit project at the Rheingold site. He's also pushing for a rezoning at the former Pfizer site at the edge of Bed-Stuy that would allow him to develop a 777-unit rental complex.
Most of these investors, believers in the concept of "ayin ha-ra" or evil eye, either didn't respond to requests for comment for this story or declined to comment. Dozens of market sources who spoke to TRD for this story did so under condition of anonymity, for fear of antagonizing them.
"They believe their success happens because they're under the radar," a former employee at a top financial brokerage said. "Blessings come from God for staying private."
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