Over the past few years, high-profile developers Kevin Maloney and Michael Stern have worked together on several very successful projects. Currently, the pair is behind what’s slated to become one of the tallest residential towers in the city — an ultra-skinny, 1,350-foot hotel and condominium tower at 111 West 57th Street next to the Steinway Building. But behind the scenes, it appears tensions have been rising between the principals of JDS Development and Property Markets Group.
Indeed, despite successful collaborations on a number of developments since 2010, JDS and PMG will not join forces again after their current roster of projects is successfully completed, PMG founder Maloney told The Real Deal in a recent interview.
“There’s probably not a good fit here for us to work together going forward,” Maloney said of Stern, the JDS chief executive. “We’re very different personalities. [We have] different philosophies on managing people.”
JDS and PMG first partnered on a condominium conversion project dubbed Walker Tower, at 212 West 18th Street in Chelsea. PMG came into the deal at the last moment. At the time, Stern, a builder with little Manhattan development experience who had inked a contract to buy the building, had lost his financial partner. He was still looking for an investor four days before the deal was set to close, Stern previously told The Real Deal.
The project, which is almost sold out, has been a home-run for the partnership, sources said. In January, a penthouse sold at the building for $50.9 million.
But Maloney said he jumped into the deal with Stern after doing little due diligence about Stern’s background or past projects.
“I don’t know really what he was doing prior to Walker Tower. There have been all sorts of stories,” Maloney told TRD. “I only looked at the deal he was working on.”
While still in the midst of the Walker Tower conversion, JDS and PMG entered into several other marquee deals together. In addition to 111 West 57th Street, they’re in the midst of converting a commercial building into a 70-unit condo dubbed the Stella tower at 435 West 50th Street. Units at the property will ask between $1.5 million to more than $9 million, it was previously reported.
Stern and PMG were also partners in projects like a 51-unit rental building at 202 8th Street in Gowanus, which they sold last year for $37.75 million, and a 46-unit rental building at 50 North 1st Street in Williamsburg, which they sold for $33.8 million last year. Both deals generated hefty profits. The partnership paid $5.8 million for the two lots on which the 8th Street project was built and $10.49 million for the North 1st Street property.
Stern is also said to be a partner in several projects being developed by PMG in Miami.
The beef between the parties: Maloney said execs at PMG, particularly a partner at the company, Elliot Joseph, were miffed when Stern appeared to take credit for the partnership’s projects in press reports.
“I don’t know that it’s productive for any developer to stand up and get too much on his soap box, saying look at all the great things I did,” Maloney said. “You can’t stand up and take credit for design and layout, you had a designer and an architect who did that. You can’t take credit for zoning because the zoning lawyer did that. I don’t think it’s appropriate to take credit for work that you don’t do. You’re more magnanimous if you give credit to your architects and to your partners.”
“Because he was trying to grow his business,” Maloney continued. “It was important for him to be in the limelight a little more than made sense for us.”
In addition, while PMG has an “open-shop” environment with lots of execs authorized to make decisions, all JDS moves go through Stern, Maloney noted. That commitment to hierarchy was also a point of contention between the partners, he said.
So, why did PMG and JDS continue to enter into deals together after Walker Tower?
“We got into those projects early in the relationship,” Maloney said. “It’s like dating someone. In the beginning, everything is great and then you start to see the cracks in each one of your relationships and you start to move away.”
JDS and PMG will remain focused on their current projects and have a functional working relationship, Stern indicated in a statement issued to TRD.
“The partnership between JDS Development Group and Property Markets Group has been extremely effective, and I believe that both companies will continue to benefit from the relationship in the future,” he said in the statement. “Already we’ve completed several hugely successful projects together, and we look forward to completing more with PMG as our partner.”
Following the interview, Maloney back-pedaled on some of his earlier assertions and pointed to the partnership’s successful track record.
“Some of my comments were made in the heat of the moment but despite our different management styles, we’re very pleased with our overall JDS partnership,” he said in a statement delivered via his spokesperson. “We achieved amazing results at Walker Tower, and will do the same with Stella and our joint ventures in Miami. In the end, the only thing that matters to me is developing world class projects featuring great design and architecture.”