“Like a divorce with no prenup”: The story of how a century-old real estate dynasty got divided

The family portfolio, now split between two siblings' companies, is valued at over $200M

New York /
Aug.August 14, 2017 07:00 AM

On August 19, 2014 lawyers for Robert and Laura Lemle met in a courtroom in Lower Manhattan. Litigation is a fact of life in the New York real estate business, which the Lemle family had been involved in for almost a century. But this suit didn’t involve disgruntled tenants, contractors or partners.

Instead, Laura was suing her brother, alleging he had refused to pay her nearly $800,000 as a 2014 arbitration decision stipulated. The August proceeding capped off a protracted and tense negotiation to split up the family’s real estate holdings, which settlement documents show had been appraised at $209.5 million in 2012. In the end, the portfolio was split between two new companies, Robert’s Copperwood Real Estate and Laura’s LC Lemle Real Estate Group.

This is far from the first family business to break up. The Elghanayans split into Rockrose Development and TF Cornerstone in 2009, the Milsteins split into Milstein Properties and Ogden Cap Properties in 2003, and Billy Macklowe split from his father Harry Macklowe’s Macklowe Properties to form the William Macklowe Company in 2010.

“It is always disheartening to see a family fall apart like this, and the emotions get in the way of business,” said Justice Shirley Werner Kornreich, according to a transcript of the August court hearing.

By examining public records, court documents, and news archives, The Real Deal has pieced together the Lemle family’s real estate history — and the catalysts for the split.

From selling hats to buying real estate

Like many New York real estate dynasties, the Lemle family story begins with a plucky immigrant who tried his hand at other careers before making a mark in real estate.

In 1887, still just a teenager, Julius Lemle left the small German village of Rulzheim and arrived in New York City. He found work as a milliner in Lower Manhattan before heading upstate to try farming, according to an account from Copperwood. At some point, he became a real estate broker, working on investment sales in the Bronx, the Upper West Side and the Upper East Side. In 1921, when he was in his late 40s, he founded J.Lemle & Sons with three of his children.

Julius began buying real estate in the 1930s. In 1953, Julius’ son Leo took over the family business. By that point, J. Lemle & Sons had also amassed a sizable portfolio, mostly on the Upper East Side.

This was the portfolio that Leo’s children — Robert and Laura — were presumably to inherit through the company. But the pair of third-generation siblings took different paths into the business.

Their role can be traced at least as far back as two adjacent buildings on East 81st Street, 444 and 450. According to public records, the property at 450 passed on to Leo’s children in 1979 by the trust created in their grandfather Julius’ will. The building at 444 remained in Leo’s name until two years after his death in 2000, when records show the deed was transferred to J. Lemle & Sons.

At the time, Laura was serving as partner of the company, a position she held for roughly 15 years.

“It was just part of our lives,” Laura said in a statement. “Working in my father’s office, going with him to the buildings — it was the family business.”

Robert served as Cablevision’s general counsel for two decades, working as a key adviser to telecom mogul Charles Dolan before formally joining J. Lemle & Sons in 2011. A year later, he and Laura entered into a property division agreement in which they split up the company’s holdings.

“Robert had an interest in developing some of our buildings, and I always liked the rental aspect of the market and wanted to continue to grow that side of the business,” said Laura. “It seemed like the best idea would be to each take a share of the buildings so we could focus on the areas we preferred.”

One real estate professional who’s familiar with dissolutions involving family firms said a smooth transition can depend on the procedures in place before the decision to split is made.

A division without robust procedures may be contentious, “like a divorce with no prenup,” he said.

The break

Although the exact circumstances remain murky, the actual process of dividing the Lemle portfolio appears less amicable than Laura’s statement suggests.

The buildings the siblings shared on East 81st Street — either personally or through the business — were a particularly sticky point. The buildings were to be divided, according a section of the agreement written specifically for 444 and 450 East 81st Street. The building at 444 would go to Robert and the building next door at 450 would go to Laura. At the time, the buildings shared a boiler, hot water heater, and laundry room. So until they could construct “totally independent utility services,” the costs and profits would be split evenly, according to the 2012 agreement. What was once shared in the family, now lay divided.

In October 2013, Laura and Robert began arbitration hearings to settle the remaining issues, in what Kornreich would later refer to as “a very, very intense and robust arbitration.” The process included 162 exhibits, testimony from 10 witnesses, and a transcribed record running over 1,000 pages.

Documents show the siblings couldn’t agree on how long it should take for Laura to move out of the J. Lemle & Sons office, which Robert laid claim to as part of the property division agreement.

“Objects with little monetary value but high emotional significance occasioned bitter disputes, causing stalemates, impeding progress, and requiring the intervention of counsel,” the arbitrator, Vivien Shelanski, wrote in the final arbitration opinion. She ruled that neither party breached the agreement over Laura’s move.

“There was bad blood between the two of them,” said one real estate insider familiar with both LC Lemle and Copperwood.

In late 2014, Kornreich upheld the arbitrator’s decision, ruling in Laura’s favor and finalizing J. Lemle & Sons’ division.

Familiar neighbors

Today, the Lemle family’s 34-property portfolio includes 727 residential units and at least 44 additional co-op apartments in other buildings. The holdings are split between Robert and Laura’s companies.

In 2015, Copperwood’s 19 properties grossed $9 million in income, netting $6.2 million after expenses, while LC Lemle’s 15 properties pulled in $10.3 million, with $7.8 million of income after expenses, according to a TRD analysis of tax records. Some buildings in the family’s portfolio did not report net incomes for 2015, a figure that excludes debt service and expenses from capital improvements. Exact income statistics for each company’s holdings are unclear.

LC Lemle’s portfolio also includes 40 co-op units in the six buildings at 205-215 East 88 Street (Robert owns four co-op units at 136 West 16th Street) and is two buildings smaller than what was set out in the property division agreement, having sold the buildings at 234 and 518 East 88th Street for a combined $8.8 million in December 2012.

Robert, who founded Copperwood with his son Zach, did not respond to questions emailed by TRD, but sent a statement through a spokesperson that stated the company was actively upgrading buildings and renovating apartments. According to Copperwood’s website, rental units at their properties range from just over $2,000 for a one-bedroom to roughly $4,000 for a three-bedroom.

Representatives from each company say Robert and Laura have a good relationship — any bitterness has since subsided, according to an LC Lemle representative. With their buildings sharing the same neighborhood, and even the same block, the siblings may need to get along.

Yoryi DeLaRosa contributed research.

Correction: Robert Lemle worked as a key adviser to Cablevision founder Charles Dolan, not James Dolan as an earlier version of this report incorrectly stated. 

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