Real estate’s biggest feuds

A look at the bitter family battles that have pitted siblings against siblings and parents against children -- from the Feils to the Macklowes

Dec.December 01, 2013 07:00 AM
From left: Henry, Thomas and Frederick Elghanayan

From left: Henry, Thomas and Frederick Elghanayan

Earlier this year, the Feil Organization, one of the oldest family-owned real estate firms in the city, made headlines when a feud blew up between its siblings over the company’s $7 billion portfolio.

The dispute pitted Jeffrey Feil, who is currently running the company, against his three sisters, who claimed their brother was attempting to buy them out at a discounted rate and that he wasn’t fairly sharing the family fortune.

Though that kind of family dispute is not unique to the real estate business, brokers, developers and lawyers say many of New York’s real estate families come undone because they don’t heed basic financial advice: Plan successions carefully.

“What’s the best way to avoid problems? To not have any children,” joked Jonathan Mechanic, chairman of the real estate department at law firm Fried, Frank, Harris, Shriver & Jacobson. He added that making sure assets are transferred fairly and cleanly can require intensive legal planning.

The story of the Elghanayan family is also an instructive one. In 2009, brothers Henry, Thomas and Frederick split their firm, Rockrose Development, into two separate companies in order to head off what some have said might have been a messy fight among the brothers’ children.

Though the family debated for a year about how to carve up assets fairly, in the end, they flipped a coin to decide who got first pick of the buildings in the portfolio, Henry’s son, Justin Elghanayan, now president of Rockrose, confirmed.

Meanwhile, Scott Resnick also broke off from his family’s business, Jack Resnick & Sons.

In 2007 he left to form SR Capital, which focuses on luxury condos. The company is currently developing 551 West 21st Street, a 44-unit project in West Chelsea designed by starchitect Lord Norman Foster.

His family’s third-generation firm, which owns 5 million square feet of office space and about 1,000 apartments, is being run by Scott’s brother, Jonathan, and his father, Burt.

Scott, who retains an interest in the family’s portfolio, said there was no bad blood, a fact Jonathan reaffirmed.

“We have a very loving, highly functional family,” Scott said. “I just wanted to do things on my own.”

In a story in TRD’s October issue on how much real estate New York City’s top family dynasties own, Scott had said: “I wanted my father to be my father, and not my senior partner.”

‘All hell can break loose’

From left: Harry and Billy Macklowe

From left: Harry and Billy Macklowe

The loving dynamic that Resnick described in his family is, however, not always present in other real estate families — as lawyers can attest.

“All hell can break loose unless there is some sort of preemptive, voluntary and amicable divvying up of properties,” said Aaron Shmulewitz, a real estate attorney, speaking in general about family feuds in real estate.

Shmulewitz added that rifts are commonplace after a few generations, as descendants look to take companies in different directions, or just cash out from the family properties to park the money into different types of businesses.

He cited the well-publicized travails of the Milstein family, which involved nasty bickering between cousins Philip and Howard.

Indeed, Philip, son of Seymour, sued Howard for improperly using funds from the Milford Plaza Hotel and the sale of Douglas Elliman — which the family firm owned, but sold in the late 1990s — to try to buy the Washington Redskins. In retaliation, Howard went after Philip to have him booted out as CEO of the family-owned Emigrant Savings Bank.

To help ensure more peaceful transitions between generations, most real estate families set up basic trusts, specifying exactly how properties must be transferred and eliminating room for debate.

In addition, families can structure decision-making in a way viewed as fair by siblings and cousins, whether it requires a simple majority vote or greater approval by, say, 10 of 12 members, attorneys say.

The Durst Organization, which was founded in 1915 by Joseph Durst and is now run by his descendants, makes many of its key decisions through a so-called board of managers comprised of 11 family members from the same generation. That arrangement, a company spokesperson said, keeps the power relatively concentrated, since the older generation of Dursts has fewer members than its children. It also protects against possible revolt.

Company chairman Douglas Durst explained the firm’s operating structure to TRD for October’s story.

He said the trusts are “generation-skipping,” meaning each generation has a limited say over the properties that directly benefit it.

He also noted: “The shares of the corporations are owned by the [family members’] trusts. The corporations run the buildings, and they decide how much money has to go into the buildings or new ventures [and how much gets] distributed to the trusts.”

Cheated out of fortunes

Frank and Michael Ring

Frank and Michael Ring

When the rules about how money and properties must be passed down are not explicitly spelled out, skirmishes often erupt.

For example, the recent sale of Williams Real Estate to FirstService Corp. (which later became Colliers International) led to an ugly court battle.

In 2009, Candace Carmel Barasch, a daughter of the late Robert Carmel, a Williams principal, sued Colliers, claiming she was cheated out of her stake of the sale, according to the suit. This year, she was awarded $4 million.

Similarly, after the 1999 death of William Gottlieb, who owned a large amount of property in Greenwich Village, his heirs began jousting over the family’s portfolio.

Much of that battle stemmed from confusion over the fact that Gottlieb’s will was vague.

Real estate insiders say sloppy estate planning is not uncommon in the industry. Real estate attorney Adam Leitman Bailey said, however, that it can be rectified by involving children in the process early.

“As your kids get older, you want to be able to say that if you want ‘z,’ you must do ‘x’ and ‘y,’” he said. “There must be open conversations.”

While most of the city’s big real estate families are savvy financial players, lawyers stress the importance of planning for hefty inheritance taxes before a death in the family forces properties to be passed down.

That’s why many New York owners give their kids a piece of their portfolios before they die in the form of a stake in a company LLC, Bailey said. He added that he regularly sees family elders pass down stakes of 25 percent or more before retiring.

Real estate families are also encouraged by the current tax structure to transfer small sums to the next generation, but the $14,000 annual gift tax exemption — per parent, as of 2013 — is seen as far too low to help transfer any significant property portfolio.

Yet the lifetime tax-free amount has climbed sharply in recent years, creating another option for parents who want to pass down property while they’re still alive. In 2014, that exemption will be $5.25 million, up from $1 million in 2010.

“It’s always a balance of give now or give later,” said Luigi Rosabianca, a real estate attorney.

He also joked that wealth in real estate families tends to follow a predictable path: The first generation builds it; the second generation spends it; and the third generation destroys it.

Of course, some family relations have been smoother. Analysts say the Rudins and the LeFraks have consistently managed to pass the baton between generations without a hitch. But others say that conflicts, in sometimes Biblical scope, are inevitable.

“It goes all the way back to Cain and Abel,” Shmulewitz said. “At some point, it is very likely that bad blood will develop.”

Below is a look at some of the bitterest feuds within New York real estate families.


One of the more recent and high-profile cautionary tales involves the Macklowes.

Harry Macklowe, the family patriarch, made a huge wager during the boom, buying seven office buildings from the Blackstone Group for $7 billion, personally guaranteeing a $1.2 billion loan in the process.

After Macklowe lost much of his portfolio — including the trophy General Motors building — in the latest financial crisis, his son William “Billy” Macklowe publicly blamed him, calling his father out in the Wall Street Journal for reckless investing.

Billy then took control of the family business, Macklowe Properties, before breaking off and forming his own firm in 2010: the William Macklowe Company. In addition, the family firm sold most of its stake in 400 Madison Avenue and 610 Broadway, but left Billy 10 percent of those buildings along with management rights, according to news reports. His firm also has stakes in a few office towers, including 386 Park Avenue and 636 Avenue of the Americas.

And Billy seems to be cementing his own legacy; last month, he purchased 156 William Street, in the Financial District, for about $63 million, according to reports.

Though father and son appear to have reconciled somewhat — “We have holiday meals. We have family brunches, stuff like that,” Billy told TRD last year — Billy does not, sources say, have a role with 432 Park Avenue, a ground-up condo project that Harry has said will define his career.

Meanwhile, more dramatically, Macklowe has been battling his former son-in-law, developer Kent Swig, for several years. Over the summer, a Manhattan judge ordered Swig, who was married to Macklowe’s daughter Elizabeth, to repay a $200,000 loan that his father-in-law gave him in 2009. Needless to say, the two will probably not be breaking bread together over the holidays.

Representatives for the Macklowes declined to comment.


When William Gottlieb died in 1999, his heirs swiftly began fighting over his estate. And the dispute continued for more than a decade, until its resolution in the late aughts.

Gottlieb’s portfolio — which according to published reports includes nearly 100 buildings in Greenwich Village, the Meatpacking District, the East Village, Soho and elsewhere — was valued at $1 billion during the boom. It includes well-known (and long-empty) sites like the triangular Northern Dispensary on Waverly Place, as well as the former Keller Hotel on West Street.

While Gottlieb did not have any children of his own, his heirs organized into two opposing camps: those aligned either with Gottlieb’s sister, Mollie Bender (who is now deceased), brother Arnold, and Mollie’s son, Neil — or with Mollie’s daughter, Cheryl Dier, and her husband, Jerry. The two sides duked it out in court in a years-long brawl over financial control.

The fighting even got physical, according to news reports, as a lawyer hired by Arnold allegedly punched and kicked Cheryl and Jerry shortly after Gottlieb’s death.

A four-page will, drafted in the early 1970s, when Gottlieb was starting out, seemed to give the Benders the strongest claim to run the empire. The Diers, however, countered in Surrogate Court papers in 2007 that Neil Bender had a drinking problem and should not be allowed to manage the properties, which sit in some of the most desirable neighborhoods in the city, but whose development potential is mostly untapped.

But in 2010, Bender defeated a final appeal by the Diers, putting him squarely in the driver’s seat.

Almost immediately, Bender started making moves.

He sold a six-story building at 79 Horatio Street for $6 million. (Last fall, it changed hands again, for $10.5 million, according to real estate website StreetEasy.)

In 2012, two adjacent lots, at 327 and 329 East Houston Street on the Lower East Side, were also sold, for a combined $12.4 million.

And, the firm has indicated that it wants to begin marketing the Dispensary building, which has been mostly empty since Gottlieb bought it in 1998.


The Ring siblings, too, did not see eye to eye on how to handle their 1 million-square-foot Manhattan portfolio.

Leo Ring, along with his sons Frank and Michael, began amassing properties in 1968, with each owning a one-third stake in what ultimately became a 15-building portfolio, a source familiar with the ownership structure told TRD. After Leo’s death in the late 1980s, Frank and Michael restructured their ownership, with each getting a 50 percent interest.

The portfolio includes an impressive collection of prime Manhattan office buildings — such as 212 Fifth Avenue, 157 West 23rd Street and 251 Park Avenue South — though most of them are now famously empty.

Though both Rings had an equal inheritance, they were not equally involved in managing the portfolio. Frank handled the properties, through his F. M. Ring Associates, while Michael worked for four decades for the landlord Helmsley Spear.

Perhaps unsurprisingly, in recent years differences began to emerge between the brothers about how to lease or manage the increasingly empty towers. On the outside, the vacancies confounded local brokers. And the pressure began to mount from would-be investors.

In 2011, much to his brother’s chagrin, Michael decided to partially cash out of much of his 50 percent share in the portfolio, signing a contract to sell a controlling interest of his stake to investors, including brothers Joseph and Eli Tabak, for about $112 million. Though Michael later changed his mind about that sale and fought it in court, the Tabaks flipped the contract to Gary Barnett of Extell Development — who had tangled with the Rings a few years earlier — for $65 million earlier this year.

And Barnett didn’t stop there. In an effort to buy Frank out, Extell sued him earlier this year to force a sale of the portfolio.

But in October, Extell inked a deal to buy Frank’s stake in the portfolio. (The portfolio is estimated at about $700 million.)

Frank declined to comment through a spokesperson, and Michael did not respond to a request for comment. But last year a lawyer for Frank told TRD: “Frank will neither initiate nor participate in exchanges with Michael in the media.”

Still, Frank seems eager to put the family drama behind him. “We’re very excited about the freedom this sale will provide us,” he said earlier this year about the blockbuster deal. “Having built this portfolio with my father, I’m especially looking forward to building another portfolio together with my sons.”


The Feil dispute involves one of the most valuable portfolios in the city (estimated at $7 billion), and it’s currently raging in three separate courts.

At stake is ownership or control of about 26 million square feet of New York City apartments, offices and retail space, including the Fred E. French Buildings at 551 Fifth Avenue, as well as the General Electric Building at 570 Lexington Avenue.

Louis Feil died in 1999; his wife, Gretchen, in 2006. It didn’t take long for their four children to go at each other once they were gone.

Sisters Marilyn Barry, Judith Jaffe and Carole Feil accuse their brother Jeffrey Feil, whom their father Louis put in charge of the estate, of trying to orchestrate a takeover. They argue that Jeffrey is paying them too little revenue for their stakes in the firm’s buildings. They’re accusing him of scheming them in an effort to undervalue those stakes, so that they seem to be worth less when Jeffrey seeks to acquire them, which he reportedly wants to do, the Wall Street Journal reported.

In simultaneous battles in three courts in New York and Louisiana, the sisters also claim that Jeffrey has hidden records, and has deprived them of funds from new properties purchased during the recession. They also say those new properties will be slapped with a huge inheritance tax bill upon the sisters’ death because they were purchased with family money. That bill, they claim, will cause financial grief for their children.

The sisters claim that they get about $300,000 a year each from the family business, according to the Wall Street Journal. But Jeffrey disputes that figure, arguing it’s about $1.5 million each when factoring in tax credits.

“The binding of the book became loose when my father died,” Jeffrey Feil told the Journal in September. “The pages fell out after my mother died.”

The Feil Organization did not return calls for this story.

Williams Real Estate

Sometimes battles erupt between executives who are like family, even if they are not flesh and blood. That was the case at Williams Real Estate — the development company behind One Dag Hammarskjold Plaza, 979 Third Avenue and 1700 Broadway.

In 2009, the firm’s principals decided to sell their firm to FirstService Corp., a Canadian company that purchased commercial firm Colliers International in the early 2000s.

But board member Candace Carmel Barasch, whose father, Robert Carmel, was a principal at Williams from the 1950s until he died in 1996, voted against the sale. Barasch, who inherited a stake in Williams and became a board member when her father passed away, opposed the company being taken over by a multinational corporation.

The $27 million sale of the company — whose principals include Andrew Roos and Michael Cohen, the grandsons of the firm’s founders, who were like family to Robert Carmel, sources say — went through anyway. (The following year, in 2010, Williams was rebranded as Colliers.)

As a result of her opposition, Barasch claimed in court that she was stiffed out of her fair share of the sale. In her 2009 suit, she said her 10 percent stake should have been worth $4 million; instead, she was offered $2.2 million by Cohen and Roos, with the possibility of future payments, according to her suit.

“The entire transaction is tainted with fraud, illegality and self-dealing,” Barasch said in the suit.

After five years of legal wrangling, the case, which had reached the Appellate Court level, was finally settled last year, with Barasch getting her $4 million payout. A spokesman for Cohen and Roos, who serve as Colliers’ president and vice chairman, respectively, downplayed the fight in the Wall Street Journal this year, saying that “the sale of any business with multiple shareholders frequently causes disputes to arise.”

Additional reporting on Ring by Adam Pincus

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