Miki Naftali, the CEO and president of Israeli real estate and hotel development conglomerate Elad Group, announced last week that he would step down from the role he’s held for more than a decade in order to start his own company, and The Real Deal got him on the phone to find out more. Naftali, who will retain a 49 percent stake in New York subsidiary Elad Properties, chatted about his new real estate venture, the Naftali Group, and about what will become of Elad in his absence. Meanwhile, Naftali sought to quash rumors that recent retail struggles at The Plaza Hotel — the revival of which was the hallmark of his tenure, at least as far as New York City is concerned — had anything to do with his departure.
Last week, the Post reported some behind-the-scenes tension at the Plaza that sources said was a catalyst for your departure, but you’ve denied that version of the events. What’s the real story there?
I felt it was time for me to move on and open my own company. There’s nothing behind it — no tension whatsoever. In a $5 billion company that we created, to report that maybe there’s tension because of the Oak Room… it’s meaningless. It’s not even important in the scale of the group and everything. I cannot keep my position as CEO of the Elad Group because I’m getting very, very busy [with] my own deals. I didn’t do it based on any argument or anything like that.
What’s so appealing about having your own company? You seem to have done all right for yourself at Elad.
At the end of the day, in my deals, the profit is all going to be my problem or my benefit and that’s what I want to do. I also want to work with other investors that I met throughout the years. I’m sure that [Elad owner Yitzhak Tshuva] would prefer that we… continue to be together, but at the same time, he is very understanding and understands that I have my own ambition.
I’m actually very confident that the timing is right to explore opportunities mainly in the New York market but also other selective markets. It doesn’t matter [if it’s] a conversion, or repositioning, or new development — you can really create value.
Tell us more about your new venture.
I started to form the Naftali Group a couple of months ago, and we’ve already started to work on a couple of small deals — mostly residential, but not only residential. I have a lot of experience in hotels and office buildings… but right now I see more opportunities in the residential market. Hopefully in a week or 10 days [I will announce] two substantial deals, in New York City, but not necessarily Manhattan. Brooklyn is great.
Where’s the money coming from?
At this point the capital is coming from myself and we are working on — there will be a point where we will need additional capital. We were approached by… a few investors that would like to invest with us. We are at the point where we’re forming a fund to let the investors invest in the fund and work with us on the bigger transactions, but right now we’re just talking.
Are you bringing over any Elad staffers to your new team?
A few. I don’t want to mention who at this point… but I will mention my right-hand man [at] Elad, [Executive Vice President] Victor Sigoura. At the Naftali Group, he’ll be Chief Investment Officer.
Will the Naftali Group be in competition with Elad?
I don’t see it as a competition. Nothing is certain, but I don’t think so.
Right now, you’re still Elad’s CEO. What’s the transition plan?
I will help in a transition and will stay as long as is needed, because, look, having created the Elad entity and the brand, the last thing that I want is [for] Elad [to] not be successful… I’m staying on as chairman of Elad Canada, and the Naftali Group will continue to act as developer of 250 West Street in Tribeca for Elad. To get it done, it will take us probably another 18 months. We are hoping to get [the attorney general’s] approval in about three to four weeks.
Have you named a replacement?
I am part of the selection team, but at the end of the day it’s not my decision. I think they’re quite far along. [They have] probably two, maybe three candidates narrowed down at this point. They’re all from outside the company.
What’s the latest in the Oak Room rent dispute? Is the restaurant still set to vacate the space in July?
Yes. We are working on a settlement. [We’re] letting them leave — letting them out of their lease — and we are bringing in a respectable operator. The intention is to make sure it’s a great restaurant. In the next few weeks a deal will be done.
It’s been reported that retailers at the Shops at the Plaza are struggling because foot traffic is low. What’s your vision for reviving the space?
We’re working on expanding the Food Hall [by Todd English] and also bringing in food retailers for most of the concourse level, [which] will even double the foot traffic, as we see it. Two or three small stores are located in an area that will be really too close to the food… We are probably going to work out either a relocation within the shops or a departure. At the Edwardian Room, [we] are negotiating with two specific tenants right now.