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.