The Real Deal New York

Menachem Stark’s portfolio revealed

In wake of murder, a tally of the developer’s properties

March 01, 2014
By Adam Pincus

054 Stark se FINAL.indd

Click to enlarge (Menachem Stark photo credit: Eli Wohl)

Two months after the burned body of Brooklyn developer Menachem Stark was found at a gas station in Great Neck, L.I., the motive behind his murder remains opaque. Now law enforcement officials and lawyers are looking to the real estate portfolio Stark amassed during the last boom for clues.

Sources say Stark and partner Israel Perlmutter owned around 1,000 apartment units. For this story, The Real Deal combed through city property records and the real estate database PropertyShark and identified 832 of those existing or planned units by address at 37 locations. The two bought most of those units and the development sites they sit on between 2000 and 2008 for more than $61 million, according to TRD’s analysis. (Click here for an interactive map of the properties.)

The pair started selling and transferring most of those properties beginning in 2009, many of them to associates. In the immediate wake of his murder, investigators suggested Stark may have been involved in dubious foreclosure transactions with people he knew. But the NYPD did not respond to requests for comment last month.

The largest apartment building that remains in the Stark-Perlmutter portfolio, 100 South 4th Street, a 74-unit Williamsburg rental, is at the center of a bankruptcy court dispute. The lender is alleging that more than $1.7 million is missing from a checking account that the pair controlled.

The 39-year-old Stark was married with seven children and a member of the close-knit Satmar Hasidic Jewish community. He was abducted on Jan. 2 outside his Williamsburg office and his body was discovered the next day in a dumpster. As of late last month, police had not publicly identified any suspects.

While members of the Hasidic community defended Stark, a slew of property violations quickly emerged, leading some media to depict him as a slumlord. Other sources told TRD he was simply a developer in over his head in a challenging market and a number of his properties had significant violations when he acquired them.

Insiders told TRD that Stark and Perlmutter had a three-pronged real estate strategy of buying old residential properties and fixing them up; buying industrial properties and converting them to residential rentals, and developing ground-up apartment buildings. The duo, sources say, was one of roughly 20 small non-institutional groups who own at least 1,000 apartment units in Brooklyn. These groups typically buy, manage and resell properties with a combination of their own equity along with equity from friends, family and some larger investors.

Stark and Perlmutter began slowly. They bought their first six properties between 2000 and 2003, including the 51-unit 315 Seigel Street in East Williamsburg.

In the next two years, however, they ramped up, diving into a hot market and acquiring 12 properties for more than $18 million combined. They also picked up a 20-year lease on an industrial building converted into residential units in East Williamsburg.

In a move that likely boosted their credibility, in 2005 they obtained a $1 million loan from Galster Funding. The private lender, which is owned by veteran investors Stanley Gallant and Jack Sternklar, is well-known in the Brooklyn multi-family world.

Sources say that loan undoubtedly helped them acquire more financing. Between 2006 and 2008, they snapped up 17 properties for a combined $39 million, the most prominent of which was a package of buildings along North 9th Street in Williamsburg, TRD’s analysis found.

However, Stark and Perlmutter became quick victims of the downturn. The two fell behind on mortgage payments and in 2009, lenders began filing foreclosure lawsuits.

TRD’s review found nine foreclosure cases filed against at least 17 of their properties. To stave off those foreclosures, they filed for bankruptcy protection through their holding companies in at least six of those cases, the analysis found.

After a four-year selling spree, only eight of their 37 properties remain under the direct control of partners, which now includes Stark’s estate, TRD found. (For a full list, see the story online.) However, an associate, and according to multiple sources, Stark’s brother-in-law, Abraham Bernat, picked up at least 12 of those properties for $29.3 million, including 120 South 4th Street, a 20-unit Williamsburg rental that he bought out of bankruptcy for $11.7 million, city records show. Bernat, who did not return a call seeking comment, served as an officer on several of Stark’s properties.

Perlmutter could not be reached for comment.

But Abraham Katz, an engineer who knew Stark for 15 years and who city records show lent him money on several buildings, said he was “a great guy and a sweetheart.”

“In ’04, ’05, ‘06, everybody was ‘buy, buy, buy,’ ” Katz said. “They got caught by the banks. He was typical, it happened to all the big guys, but he was a little guy. He was a lovely guy.”

  • Condolences

    Does it make any sense that people who knew him, invested with him would want him dead since they would know full well how hard it was to run buildings in need of repair that were having a hard time keeping up with mortgage payments? Get it? In Mr. Stark’s case, it didn’t sound like he was hurt by people who knew him well and it sounds like he was dealing with people who invested with him or purchased from him because they knew him well so that’s not the kind of thing that gets you grabbed.

    And let’s look at the nature of grabbing someone violently and throwing them into a car. I think you couldn’t know Menachem Stark on the level of his frequent investors and family members and have that kind of stranger’s momentum – it feels like someone paid strangers to take him and hurt him and it sounds like it had nothing to do with inheriting his troubled properties but to hurt him and steal his life and his family’s peace. It feels like they took him far out of his comfort zone geographically and it was a distant type of hatefulness that drove this crime. It’s that kind of pissed-off hatred of someone already evil and violent who probably does NOT want to know their murder victim enough to hate them because they already do hate him.

    It’s very hard to do this real estate thing honestly because you are relying on rents the timeliness of which is based on the characters of total strangers you are entering into lease agreements with. There are so many big picture things to worry about and if you have extended family obligations, you never feel free. It’s not a game or an ego trip then, it’s a huge burden carried in service to others.

    Do the numbers make sense that any business partners would actually benefit from carrying the load of running these properties without him? They sound like they are going to end up on the auction block and any dreams that these partners had of somehow making a go of these investments will evaportate. Menachem Stark’s young family will never get the nest egg he tried to build for them. BUT outside of those who loved him because they knew him, his family will be seen as being heirs to some untallied real estate fortune. He’s just another real estate rich guy with multiple properties in a city of basic homeowners and tenants who can’t even conceive of being in his shoes when it could be that he was in those shoes because he didn’t qualify for a good salaried job (look at the overqualified guys who work the counters at B&H Photo) or he spent much of every day reading his religious books instead of cramming for the SAT and the MCATs.

    • sinister stuff

      The fact that he owned multiple properties disguises and distracts from the cruelty of his murder. I find that so strange and I wonder why the NYPOST seemed so invested in his character assassination.

      But it is the nature of his holdings and the narrative of his business conduct over the years that should illuminate the quality of malevolence in his murder. But I doubt that most people will look at this carefully as third parties.

      • clear his name

        Is there really not going to be any justice for Menachem Stark’s reputation. Is he permanently googleable as a “slumlord” implying that he deserved what he got and that he owed 20k to a contractor being questioned to the police?

        I think that anyone who wants to dismiss his murder as the risk of the business he is in should look up the worst landlords named in NYC – none of them got murdered, right?

        Menachem Stark’s violations were reportedly already in place when he acquired some of the properties so is that not something worth establishing. is it too tedious? Because I am telling that bad guys DO NOT get murdered – not even if they own real estate. The Israel brothers are recently in the news with PICTURES no less of their transgressions and no one is dragging them into a car or hurting them or scaring them.

        It is a contradiction of the NATURE of evil and expert bullying to throw Menachem Stark into the same company so the Post must have felt they could do so with impunity because no scary guy was going to come knocking on their door after the front page news hit the newsstands but why did the Post mischaracterize with such enthusiasm. That’s not strange to anyone else?

        I had a tenant who bounced over 20k in checks and partied after 9-11 but you don’t see me grabbing him into a car and dropping him off dead in Great Neck – he’s now a doctor at NYU hospital and Yes, that does affect how I feel about that hospital and its staff. What happened to Menachem Stark should be reported much gentler and kinder and there has to be a correction in the Post for the sake of his small children.

        Do we have to educate the city and therefore its press before we can get them to agree to a correction? Really?

        NO PROBLEM. His family deserves our pity – not to be dismissed and have this hanging over them forever.

  • just a guess

    Sometimes I really question the raison d’etre of this website because the news is so insider-ish but I think that how some stranger reacts to the news coverage of Menachem Stark’s murder would indicate the purpose of this website.

    No other diaspora has this FBI profiler-calibre level of experience with murderous covetousness – am I right?

  • Judge

    I’m surprised he lasted as long as he did.

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