Real estate is a famously fickle industry.
Today’s good investment can become tomorrow’s cautionary tale in the blink of an eye, and a career in the business is rarely a straightforward climb up the corporate ladder.
Kent Swig of Terra Holdings went from real estate royalty to an industry pariah after a series of defaults, development dramas and a very messy divorce in the late 2000s.
More recently, Bellmarc Realty co-founder Neil Binder inked a lucrative franchise deal with Coldwell Banker in 2013, but he was forced to close Bellmarc’s last office just three years later after an avalanche of lawsuits from Binder’s former agents, partners and lenders.
To kick off 2020, The Real Deal chased down several other figures in New York real estate who have had some of the more memorable rises and falls to find out what they’re up to these days.
Some are still involved in the real estate business, while others have moved on to other industries. Two people TRD looked at, Michael Smith and Steve Spinola, ended on high notes after a string of successes, but were included because they have stayed mostly under the radar since. All of them help disprove F. Scott Fitzgerald’s old axiom that there are no second acts in American lives.
Still in the game and “surprisingly pleasant”
Raphael Toledano’s career so far has been best known for its controversies.
The founder and president of Brookhill Properties has made multiple headlines for allegations of tenant harassment, unpaid rent on his luxury apartment and a legal dispute with his uncle, Rosewood Realty Group’s Aaron Jungreis, who claimed Toledano squeezed him out of a roughly $100 million deal to buy 16 rental buildings in the East Village (the two ultimately settled).
The last time Toledano was in the news was this past June, when the New York attorney general’s office announced it had reached a $3 million settlement with him over accusations of tenant harassment and rent-law violations.
Toledano himself could not be reached for comment, and his attorney Ben Brafman declined to comment for this piece. But Brafman said in a statement at the time of the settlement that Toledano “looks forward to working carefully in the future and has the potential to be one of the most successful young real estate entrepreneurs in the city.”
These days, Toledano is focusing on fairly typical building sales and purchases, according to several sources who have worked with him before. So far, as promised, he is indeed “working carefully,” without the lawsuits and scandals that dogged him in the past.
David Schechtman, an investment sales broker at Meridian Capital, said his firm has represented Toledano on the sale of two small buildings in Manhattan, and working with him was not as difficult as the landlord’s history might suggest.
“Notwithstanding the fact that Rafi’s reputation is that of a little bit of a gangster, my dealings with him have been straightforward and surprisingly pleasant,” he said.
Part of Toledano’s recent, uncharacteristic discretion may be due to his settlement with the AG’s office, which requires an independent monitor to supervise his real estate business and bans him from direct contact with tenants for at least five years. If he violates these terms, Toledano could face a $10 million fine and a lifetime ban on working in real estate.
All three of his companies named as defendants in the settlement—Brookhill Properties, Adele Realty LLC and Regal Property Group LLC—are still registered as active in New York State.
One broker familiar with Toledano compared him to Steve Croman, in that they’ve both faced major legal consequences as landlords but have yet to throw in the towel.
“He’s still buying stuff. He’s in there rocking and rolling,” the broker said.
But the broker stressed that he has no desire to work with the purportedly reformed bad boy of real estate.
“I will deal with him never. I don’t like him. But he is active,” the broker said.
From disrupting resi listings to selling “experience packages”
Michael Smith secured his place in New York real estate history by co-founding StreetEasy, which revolutionized the way city residents search for housing.
He served as the company’s CEO from 2005 to 2013 and as its chair from 2013 to 2014, after Zillow famously purchased it for $50 million.
In 2015, soon after leaving StreetEasy, Smith became CEO of String Discovery & Messaging, according to his LinkedIn profile. The company, which touts its app as “everyone’s personal concierge,” allows users to search various cities and neighborhoods for entertainment options like restaurants, cafes and hotels. Users can also purchase “experience packages,” such as a personal concierge for a trip to Miami or a guide to high-end dining options in Washington, D.C.
Smith did not comment for this story, but in a 2018 interview with CNET, he billed String as a more exclusive, tailored version of review sites like Yelp and TripAdvisor.
“Both TripAdvisor and Yelp provide search results based on the ‘wisdom’ of the crowd — not personalized to individuals’ particular tastes and preferences,” he said. “Their search results are based on simple location data or cuisine and the highly irrelevant, passé ‘number of stars.’ But fundamentally, you trust your friends and certain brands for recommendations — not what the crowd thinks.”
String is a project of Tribeca Heavy Industries, where Smith has worked as a managing partner since 2004, according to his LinkedIn profile. The company’s website says it works with “a wide range of businesses” as a builder, consultant and investor, although String is currently the only business featured on the site. Tribeca lists phone numbers for offices in New York and Paris.
Smith founded String with Ari Horowitz, the former CEO of arts and culture publisher BlackBook Media. The two are also listed as executives at the company Hudson Palm on its website. Hudson Palm focuses on providing consulting and investment services to hospitality technology companies.
Serial entrepreneur expanding new luxe-lifestyle play
Andrew Heiberger has launched and led several companies, including listing site Citi Habitats and developer Buttonwood Development, and was most recently known for founding Town Residential, which did $14 billion in sales and 23,000 transactions before it abruptly shuttered its resale and leasing businesses last April.
The sudden nature of the closing, Heiberger told TRD, left him without much of a script for his next act.
“Since the decision that April was made pretty much the same day as the announcement, I did not have a ‘good next steps plan’ for my career,” he said.
Heiberger said that since the Town debacle, he’s been working on several new projects as well as managing Town’s remaining business and contracts, and he expresses an entrepreneur’s confidence in his prospects.
“I remained focused on the task at hand, acted in good faith and knew that I would once again find myself on top,” he said. “And that process is still unfolding.”
Most recently, Heiberger has focused on expanding his high-end lifestyle-management firm Luxury Attaché, where he serves as principal. The company offers services such as amenity-space management, concierge services and travel planning.
Luxury Attaché has offices in New York City, Boston, Miami, Los Angeles and San Francisco, and Heiberger hopes to expand the company further within those markets, he said.
Heiberger described the venture as the “frontrunner” among his various business projects, at least for now.
He said he even has a plan in mind involving real estate media, though he declined to share details with TRD.
Heiberger has been brokering occasional real estate deals as well, including retail leases, student housing and a luxury resort in Rhode Island, he said — and he’s not ruling out getting back into development through Buttonwood.
“I’m working every day, and I’m working to make short-term profits and also to have some sort of longer-term play where I can accumulate equity,” he said. “I’m not retired.”
Heiberger hasn’t let last year’s dramatic setback sap his morale, and he wants to put the real estate industry on notice that he’ll be back as a player.
“I will always make money, and I expect great things in 2020,” he said, “so stay tuned.”
Retired REBNY legend keeping his toe in the water
Steven Spinola was the longest-serving president in the history of the Real Estate Board of New York, holding the position from 1986 to 2015, when he retired from the role — some would say just in time.
His exit came not long before REBNY’s ignominious defeat in Albany last year, when legislators passed the most onerous rent-law reforms in recent memory. Not long after the unexpected thrashing, Spinola’s successor, John Banks, decided to step down, and it has cast the storied lobbying organization into the political wilderness now that an increasingly populist Democratic Party controls Albany.
Spinola acknowledged that that he may have dodged a bullet but said he still misses working for the group, where he remains president emeritus.
“Obviously, times have changed, and I jokingly say, ‘Well, it proves that the best thing that I have is timing,’” Spinola said, “but that’s not true.”
Spinola is still in touch with REBNY’s new president, James Whelan, and said he’s confident that the organization will regain its footing in the new leftward-sloping landscape.
Spinola currently serves on the boards of Lightstone Group and Plaxall and said he likes that the work helps him stay current on real estate issues.
In fact, his work with Plaxall even gave Spinola a hand in one of the biggest and most controversial real estate plays in recent memory, when he flew out to Seattle with other board members as Amazon mulled establishing a headquarters in Long Island City with a footprint that included some of Plaxall’s development sites in the neighborhood.
Spinola said he went to Seattle without any expectations, as he didn’t think the e-commerce giant was seriously considering Queens for its “HQ2.”
“We went there not believing we would reach a deal because we had no idea that we were high on the list,” he said, “and clearly had no idea at the time we were No. 1.”
But they came back to New York with a tentative agreement for the biggest development opportunity in recent memory — only to watch it crumble under a political assault that REBNY was unable to counter. Still, Spinola tries not to dwell on what could have been.
“There’s no sense looking back,” he said. “You’ve got to look forward: What could happen now? And we’re optimistic that City Planning is back on track with coming up with a good plan for LIC.”
Momentous business trips like that have been the exception to Spinola’s post-REBNY life rather than the rule, however. He has mainly spent the past few years enjoying conventional retirement pursuits like playing golf, taking trips and spending time with his grandchildren.
“That’s what I enjoy doing,” he said. “I’m just thrilled that I’ve found a mix of ability to enjoy myself and enjoy my family, but still stay in touch [with the real estate world] and learn.”
Continuing Clarett and mentoring women in real estate
Veronica Hackett was a major player in New York real estate in the late 2000s and early 2010s, thanks to the Clarett Group, her residential and office development firm.
That seemed to end in 2011 with Hackett’s move to Brookfield Properties: TRD reported that Clarett had shuttered its New York office and that its Los Angeles and Washington, D.C., offices were rebranding. However, Hackett took issue with that characterization in a recent interview with TRD.
“I never really shut down Clarett Group,” she said. “I didn’t use it for a while because I obviously went to run Brookfield’s development business.”
After a little more than a year with Brookfield, however, Hackett said she started doing deals on her own again and working with other partners, and recalled that she still owned her earlier firm’s most important asset.
“I realized I didn’t sell the name ‘Clarett,’” she said. “And it’s got recognition, and we did some great work and some great projects, so I’ve just been using it.”
Hackett, who lives in New York, said that Clarett Group is still a going concern, although she doesn’t currently have any projects under construction. The firm is also no longer her sole focus, as she is now doing consulting work, serving on private boards and working to make the notoriously male-dominated real estate world a bit more diverse.
“I spend a good deal of my time these days mentoring women,” she said, “and I’m very active and involved in the women’s leadership initiative of the Urban Land Institute.”
Hackett is also involved with WX New York Women Executives in Real Estate, an organization focused on advancing women in the industry, and she volunteers as a speaker and mentor for women at LaGuardia Community College, she said.
Although she is proud of the work she is doing to bring more women into real estate, she acknowledged that the push for more gender equity in the industry remains an uphill climb.
“It’s still painfully slow,” she said. “We’d like to see a lot more of it, and we’re continually working on initiatives.”
Still suing after all these years
Bauhouse Group’s Joseph Beninati dreamed of building a 950-foot luxury apartment tower in Manhattan’s tony Sutton Place neighborhood, but default and bankruptcy handed control of the site to lender Gamma Real Estate in early 2016.
However, some dreams never die, and Beninati has spent the past four years embroiled in multiple lawsuits over the site at 3 Sutton Place that he spent two years assembling with about $147 million in loans from Gamma.
Most recently, Beninati filed a new lawsuit in May 2019 against the law firm Herrick Feinstein, alleging that Herrick partner Richard R. Kalikow had a “close personal relationship” with Gamma CEO N. Richard Kalikow and that the pair (who are cousins) conspired to persuade him to take a loan from Gamma with the intent of eventually seizing control of the site in what Beninati called a “loan-to-own” scheme. The lawsuit seeks at least $270 million in damages.
Beninati had also filed a lawsuit against Herrick Feinstein and Kalikow in 2017 accusing the law firm of negligence when representing him, and that lawsuit also cited Richard R. Kalikow’s relationship with N. Richard Kalikow as a conflict of interest.
Both lawsuits have been dismissed, and both are now on appeal, according to Herrick Feinstein and court documents.
Gamma sued Beninati in 2016 over its loans, and a judge ruled in January 2017 that he and partners Christopher Jones and Daniel Lee had to pay Gamma about $24 million. Attorney Jay Neveloff, who represented Gamma in the case, said Beninati has yet to make any payments on that judgement.
Jones fled to Spain following the judgement, writing in court documents that he no longer lived in the United States and could not afford legal representation. Beninati did not make it quite as far but still left the Northeast for the South and lives in Texas, according to Schechtman.
Schechtman, who helped broker the foreclosure auction of 3 Sutton Place that ultimately handed the property to Gamma, described Beninati as “semi-retired” with one foot in the New York real estate game, where he still has a few active investments.
Beninati and his attorney, James McCarthy of Buttafuoco & Associates, did not respond to multiple phone calls seeking comment. Beninati’s LinkedIn page still lists his location as New York and his job as managing member of the Bauhouse Group.
“At least with me, he was a straight shooter,” Schechtman said of his dealings with Beninati. He characterized the foreclosure process at 3 Sutton Place as “one of the most pleasant adverse experiences I’ve ever had.”
Correction: An earlier version of this story cited the rent law debacle as the reason for the departure of former REBNY president John Banks, but Banks has said that fallout from events in Albany had no bearing on his decision to step down.