Name: Alan Shamah
Company: Shamah Properties
Hometown: Flatbush, Brooklyn
Currently living in: Ocean Township, N.J.
How many NYC buildings does Shamah Properties own?
We own and manage 25 buildings, which contain more than 1,500 rental units. Twenty of them are in Brooklyn, three are in Washington Heights and two are in East Orange, N.J. Our main office is in Edison, N.J., but we have satellite offices in Washington Heights and Ditmas Park for our property managers. We look for affordably priced apartment buildings in working-class neighborhoods. The term “workforce housing” sounds very stripped down, but guess what? We do not own the type of housing in which people don’t have to work. About 98 percent of our portfolio is rent-stabilized. We’re not against buying market-rate units, but when we buy rent-stabilized, we can base the numbers on the fact that there are rent guidelines.
How did you get involved in the family business?
My father Joseph Shamah’s first career was in electrical engineering. He made a career change when he was 50. My siblings and I were all grown up and out of the house when he bought his first building in 1980. I graduated from Boston University in 1981. At that time, the business was too small for me to join. Also, I felt it was important for me to build up some capital first. In the first 25 years of my career, I worked in the apparel industry running a clothing manufacturer and at the same time I was investing and helping with the syndications and acquisitions at Shamah Properties. In 2007, I decided to leave the apparel industry to go into the family real estate business full time.
What was your role when you came aboard?
It was primarily to expand our investor base by bringing in more ultra high-net-worth investors because our partnerships dated back to the 1980s. Our investor base was aging. I also got more involved in property management. Shortly after my father passed away in 2011, I officially became CEO.
Has the company always been based in New Jersey?
For about 20 years, the management office was on Coney Island Avenue in Ditmas Park, where my father owned several buildings. He used to do everything: deal with repairs, talk to the tenants, take care of the collections and file documents. He had one assistant for bookkeeping. When I was growing up, he would spend a couple hours every weekend at his buildings. Tenants always called him “Mr. Shamco” because our property management division is called Shamco Management. We moved the offices to Edison in 2013. It got to the point where the business was too big to be talking via Skype. [Some employees were in N.J., while others were in Brooklyn.] But we couldn’t make the full move before my father died because it would have been too long a trip for him.
Do you have any tenant horror stories?
Around the time I joined the company full time in 2007, the super at one of our Brooklyn buildings asked me to come with him on an apartment visit. I walked into the apartment and saw a two-foot-wide pile up to the ceiling — about 50 years’ worth of newspapers, magazines, bottles and cans. It was my first experience with a hoarder.
Shamah’s last purchase was an eight-building, $44 million multifamily package in Washington Heights a little more than a year ago. Are you cautious about buying right now?
The numbers have to be right. We’re not pressed to buy. We’ve been at the top of the market for a while. I don’t mind overpaying a little because if you can hold onto the building for 10 to 20 years, it’s okay. The sellers got used to the idea that every six months to a year, prices were going up. Now, they’re not going up. All the juice in the lemon is squeezed out. Buying a building that will lose money for the first few years is what I call risky. When prices were very high, other buyers were projecting to lose 5 percent in the first year. I said to my father in 2007, “Maybe that’s how you have to do it.” He was really old at that point and having heart trouble. But he looked at me and said, “We are an income-producing organization.”
Would you ever develop a building?
Before we even get into development, I would like to see us buying much larger core assets in the $100 million to $300 million price point. We have the skills and expertise to do it. That’s probably more likely the next plateau. Right now, we’re doing one-off deals and packages for $40 million or $50 million. I’m very interested in development. We have not done much of it, aside from lobby and unit upgrades. We’ve been taking apart two apartments to build a new 1,200-square-foot gym in East Orange, and I started getting the development itch. I could imagine it down the line, in New York or New Jersey.
What type of equity partner are you seeking?
You and your equity partner have to be looking out the same window. There are a lot of equity partners that are thinking three to five years ahead. But when you are taking over a building to stabilize it, it tears your guts out just to get it where you want it to be. I’m not looking to do that every 10 minutes. I think a three-to-five-year outlook is unrealistic in multifamily. If you’re planning to get married, the bride-to-be should be looking out the same window you are.
Which neighborhoods or boroughs are you considering buying in?
We could like Queens. I’m not going to break into Queens with [only] 60 rent-stabilized units. I need to walk in with a $2.5 million rent roll in order for us to hire property management personnel to oversee that area. If there is a package of buildings — or even one single building — with those types of numbers, we could do that very easily.