Yitzhak Tessler, the 62-year-old CEO and president of Tessler Developments, spoke with The Real Deal in his first face-to-face interview since he started building in New York more than a decade ago.
The builder of projects such as 240 Park Avenue South decided to speak up, he said, to challenge the reporting surrounding 1107 Broadway, his failed condominium conversion of one of the International Toy Center buildings that became mired in the economic downturn and the Lehman Brothers Holdings bankruptcy. He was frustrated with the assertion that he defaulted on the Lehman Brothers loan, saying the story was more complicated. In the end, each side claimed the other owed it money.
In addition, Tessler answered questions about the Chetrit brothers, with whom he frequently partnered on deals, and his future development plans in Manhattan.
On June 29, developer the Witkoff Group and partner Vector Group won the auction for the 16-story former office building at 1107 Broadway, between 24th and 25th streets, with a $190 million bid. The sale was part of the Lehman Brothers bankruptcy process, and is expected to close by Sept. 29. While court records show Tessler’s project defaulted on $228 million in loans lent to it, Tessler filed documents in the Lehman proceedings asserting that Lehman owed him at least $126 million. According to court documents, Lehman will get $155.875 million from the sale proceeds and Tessler will walk away with $32.375 million.
Why did you want to speak to the media?
With Google and all the bad press, I have to push back. I never went bankrupt. So I wanted it to be known that it was not my default. The matter is settled. Not only settled, but I am walking away with money. Not as much as our total equity, but not much less.
Why not continue the litigation?
“A bad settlement is better than good litigation,” my mother [Perl Tessler, a Holocaust survivor] used to say.
You objected to the term “default” being used in the press about 1107 Broadway. Why?
They did not fulfill their pre-construction obligation and therefore I feel I did not default.
Are you still working with the Chetrits, with whom you partnered on several deals, such as 855 Sixth Avenue?
I don’t want to comment on the Chetrits. But we always developed by ourselves. They were the investors; I was the developer.
Why haven’t you given a face-to-face interview to the press since you began building in New York?
I am a private guy. I am not a public figure.
What are your plans going forward?
At 323 Park Avenue South [at 24th Street] in August we filed condo plans, for 17 apartment units. It’s 10 stories [and] designed by [architects] Gwathmey Siegel [& Associates]. [Also], we are looking to buy in Manhattan. We are negotiating a few [deals].