The Real Deal New York

Heiberger on the future of Town

Company chairman vows to continue firm’s growth; ‘we acted very un-Town-like and we're sorry’
By Katherine Clarke | March 05, 2014 08:27PM

Last night, Town Residential’s owners, Andrew Heiberger and Joseph Sitt, finally reached a settlement, bringing an end to their messy public legal battle over control of the firm.

Today, The Real Deal talked to Heiberger about how the company, which has lost several top agents since the dispute erupted, will move forward and begin repairing the Town brand.

What does your settlement with Joseph Sitt entail?
The terms of our settlement are confidential. What can be divulged is that Joe Sitt and I are jointly going to be running our company. Our day-to-day operations are going to continue to be run by Jeff Appel, our CFO Mike Schurer, and all of our department heads and branch managers.

So, you will not be reprising your role as CEO?
The natural term of my contract was expiring before this surprise came. It was always the plan that I was going to transition up. It was a three-year stint and that’s always what it was going to be.

What’s your role now?
I’m going to be there every day, but day-to-day operations are not my highest and best use. I was willing to do them for three years.

Will Sitt be taking a more active role at the company?
Even before the January 22 [termination] letter, he’d already begun to take more of an active role. We’re now at that kind of size and critical mass. Time will tell how much time he has and how much he wants to devote. There’s plenty of work here for everyone.

Will you both have distinct areas of focus?
I mean, we just settled yesterday at 8 p.m. The main takeaway from last night is that we’ve settled our dispute in full, the letter [of termination] is being retracted in its entirety, we’re partners and we’re committed to carrying out what the business plan was from the day that we opened, which was to be number one in resales, rentals, and new development sales and rentals.

Do you plan on cutting costs at Town?
Every business has a plan to streamline and cut costs but to spend if there are opportunities. This year was always going to be a year of focusing inward. That doesn’t mean streamlining or eliminating amenities here. This battle that we had was never about reimbursements for health clubs or candy or water. That’s not what the dispute was about. The day-to-day operations are going to be monitored … and all the different department heads are going to watch over their own budgets. They’ll all report up to the board, which consists of me and Joe Sitt.

It seems like you’ve been sacrificing profit for growth since you launched….
Of course. Every time you open up offices, it’s going to drag on cash flow. You’re building a brand but you’re not building cash flow. At the same time, you carefully monitor the demand, the number of people that want to come work for you. If the demand was steady, which it was, there was no reason to stop. We made a business decision to keep going.

So, Town will not be closing offices or making different financial choices in the wake of this settlement?
I doubt it. I don’t think you’re going to see that. Our business plan was working.

Do you plan to keep aggressively growing the company?
I think we’re both committed to making Town a number one company. In my opinion, in order for Town to be a number one company, we have to have the same amount of resources as our competitors and be a similar sized company . I don’t think Joe is stuck on Town stopping where we are. I’m certainly not back here to be sitting still.

In legal documents, you disclosed that an offer to buy Town was made by a large firm last year. Would you consider selling the company?
The company was never for sale. We were approached randomly and we entered into discussions. The reason it was mentioned in the litigation was to prove that the company had great value and that if someone was displeased with performance and was claiming they weren’t getting their money back, there was a way to get the money back.

What steps are you planning to take to repair the Town brand?
I’m sure there will be some lingering fallout and loss. There were a lot of people who were affected by this. All I can tell people is the truth. Both Joe and I are sorry that we had this public dispute, which marred our brand. We’re in a business that is all about reputation, trust and integrity. …We acted very “un-Town-like” and we’re sorry.

Are you looking to make new hires, given the recent departures of some of your top agents?
We’re always looking to expand our team with top producers. There is no replacement for losing Patty LaRocco and her team and Frank Arends and Daniela Zakarya as well as Takk Yamaguchi and Suzun Bennet. They’re not replaceable and it’s sad. I’m sorry to them and I’m sorry to the people who are going to feel their loss, Wendy Maitland and Itzy Garay. I hope that in due time our transactions will overtake this negative stuff.

  • Char4Dew

    Hes a great talker and a smart man. But they are in the business to flip it. Whom is he kidding? It’s just not the right time now.

  • jay

    what a publicity stunt this was. typical of sitt.
    all about exposure

  • downtownbroker

    I don’t get it. Slime your own company, file lawsuits with specific damaging info on past capital calls, leak internal bickering.. then have a dinner at Nobu and pretend it never happened? I wonder how many more teams are on the way out the door..

  • Spectator

    Their brand has suffered damage. The question I have is: Can they stem top tier defections and stay profitable long enough for this episode to be forgotten by the brokerage community?

    • Sticks&Bricks101

      That is the question.

  • LetsBeReal

    This was an unnecessary setback but the facts are the facts, company is huge already and these guys have deep pockets and track records of success. So they’re here to stay regardless. Now time to get the house in order.

  • Sticks&Bricks101

    For sale. Day One. Andrew achieved something that has never before been done. Exit was never clear but thats the fun of it. Strike prices and subsequent valuations are always a matter of dispute. That is called a negotiation. Basic math would lead a Kindergarten student to surmise that the proverbial “9” figure valuation was beyond the realm of fantasy. Would you buy building that had many tenants with the promise of them paying rents 10X in excess of their “Free rent Period” if things went well ? ( Which, in our current envirnment is a low multiple ). The term ” Stabilaization ” comes into play here. As this unfolds… Town will become a more stable asset supported by the requisite cost controls that were simply not feasible during the course of its inception. All this Hullaballoo… is just that. After all, how does one get out of the noose ? Great Theatre. Where is Wendy ?

  • Spectator

    Lets be real,

    The company is huge in what sense? The investors are still funding this start up. They have spent a fortune laying the foundation of their brand. They have now tarnished that brand. They have exposed all their faults, weaknesses and intentions. There has been an exodus of top talent. Remember “You never get a second chance to make a first impression.”

    • LetsBeReal

      I was referring to huge simply in the physical sense. 600 agents and 10 legit offices, etc. That’s big even by NYC standards, love em or hate em they will remain a big part of the brokerage scene for years to come so in that sense they will move past this episode.

  • Char4Dew

    Ahhhaaa…. what else can he say? “We have to go back on track if we want to sell it”
    I don’t think he can say that LOL

    • Sticks&Bricks101


  • Sticks&Bricks101

    The healing process always begins with sunlight. In my estimation, it has already begun. It is a good brand with good people. Evolution, by its definition, ain’t easy.

  • Sticks&Bricks101

    As anyone will tell you… Timing is everything :))

  • Sticks&Bricks101

    The investors will just have to dig a little deeper then. Won’t they ?

  • Sticks&Bricks101

    FYI… W.M. was their single greatest asset. Hats off. Rock on.

  • DFR

    Wendy Maitland, a great example of an amazing broker turned terrible manager. She played favorites and ticked off many of her brokers. Sitt’s stupid fiasco was the straw that broke the camel’s back. Town’s floodgates have opened. Many more departures to come.

    • jon

      So, true, Wendy is or was a great broker but awful and can’t manage agents.

  • Bbop

    It is difficult for one to effectively “manage” when one is in the “rah-rah” and “build out” phase. There is always going to be a hangover after that, as well bruised feelings.

  • Spectator

    lets be real,

    You seemed to have arrived at an emotional conclusion that this company is big and here to stay just because it has a lot of offices, agents and a backer with endless resources. That backer was the one who triggered this upset. We are talking about substance here and not mass. That mass is what makes this so precarious and could precipitate a hard fall. You seemed to have missed the concept.

    • Eric Malcome Lustgarten