A couple months ago, one of Brooklyn’s most active and under-the-radar developers, Isaac Hager, crossed into Queens to buy a 50,000-square-foot Long Island City warehouse for just shy of $20 million.
But while reviewing the deal’s terms, Hager uncovered a problem: He could not take advantage of the property’s total floor-area ratio. The discovery could have scored him at least $1 million off the price, according to his broker David Junik of Pinnacle Realty.
But when it came time to close, Hager opted not to push for a lower price.
“It’s a chillul Hashem,” Hager told Junik, using Hebrew to call it a desecration of God’s name. “Why look bad?”
Hager — whose Hasidic Jewish faith is said to be sometimes at odds with his aggressive dealmaking style — reasoned that it was important to stick to his word.
And that philosophy seems to be working well for him.
Hager’s firm, Cornell Realty Management — which according to a recent ranking by The Real Deal is one of the most active Brooklyn developers, with nearly 700,000 square feet of projects underway — is steadily gaining ground in the outer boroughs.
The developer has four projects in the works in Brooklyn as well as the abovementioned redevelopment of the Long Island City warehouse into offices.
But Hager’s track record is far from flawless. The joint timing of the recession and the death of his business partner left a trail of foreclosures and lawsuits earlier in his career.
His supporters say he’s learned from his past financial problems and that he’s poised to gain more market share going forward.
And, they note, he rarely talks about his professional success.
“Throughout the many years I have known Isaac, I never heard him discuss how many square feet he is developing or the amount of deals he is doing,” said David Korn, president of leasing brokerage Fiddler Realty and friend of Hager’s.
“He does not like talking about it, being a firm believer and constantly saying that his fortune is one that God entrusted in his possession,” Korn said.
Vertical defaults
Not unlike other firms run by Hasidic Brooklyn developers, Cornell has a mysterious operation. The company has no website, and its office is in a low-rise Red Hook warehouse far from its development sites — though Hager is said to be in contract for a Williamsburg property that will serve as his new headquarters.
The tall, bearded developer declined to comment for this story. But despite his enigmatic operation, sources describe him as outgoing and charming.
Hager is said to be in his early 40s and married with several children. And he has deep roots in the Vizhnitz community, which has a presence in the Hasidic enclave of Williamsburg and which also counts Brooklyn developer Simon Dushinsky as a member.
The clan was founded in the 1850s by an ancestor of Hager’s: Rabbi Menachem Mendel Hager. The family’s standing in the community was further bolstered by his grandfather, Rabbi Mordechai Hager, the longtime leader of the roughly 30,000-person community. Mordechai Hager, who died in March at age 95, founded a Hasidic village called Kaser in Rockland County, where he owned several properties and where Isaac Hager, who goes by the nickname Itzy, was raised.
In the late 1990s, after marrying, Hager and his wife, Shifra, moved to South Williamsburg, where he ran a packaging equipment company, sources close to him said.
Then in the mid-2000s, Hager launched the real estate firm North Development Group and began partnering with Chaim Lax, the founder of diamond trading and real estate investing company Dynamic Diamonds.
During the mid-aughts, Hager and Lax — who met in synagogue — along with Israeli investor Yakov Fisher built three luxury condo buildings overlooking McCarren Park in North Williamsburg: the Aurora, Ikon and 20 Bayard. Together the buildings had 136 condos and a sellout of about $125 million.
“He was going vertical before anyone else,” said Citi Habitats’ David Maundrell. “The projects on the park were the first of their kind in terms of height around there.”
Compass agent Lior Barak, who was with Elliman back then and worked with Hager on 20 Bayard, said the developer was extremely hands-on with the marketing.
“[The marketing] was really over the top,” Barak said. “We did an opening party. [For] the entrance to the building, we brought a lot of sand, and we gave people flip-flops with the logo of the building.”
Architect Karl Fischer, who designed all three of the McCarren-facing condos, said Hager likes to create excitement with his designs, “especially if it’s a condo market-rate building.” In addition, Fischer said: “He leaves no stone unturned, and he is constantly searching for what will give him the most and best return.”
But after Lax died of cancer in 2008, at age 58, and his son Moshe — now best known as Ivanka Trump’s partner in the jewelry business — took over his father’s estate, Hager struggled. He failed to refinance an existing $17.4 million mortgage at 20 Bayard and then filed for Chapter 11 bankruptcy protection in 2009. Lax had left behind massive debts, including $27 million owed to the IRS, and things only got worse under Moshe.
“It wasn’t even the market that drove Isaac to lose everything. It was an estate issue,” said Meridian Capital Group’s Lipa Lieberman, referring to Hager’s financially embattled partner.
At 20 Bayard, Fortis Property Group came to the rescue by buying the building’s 37 unsold units, but that didn’t resolve Hager’s trouble at the property. In 2014, the condo board sued Fortis over a litany of construction defects.
And just last year, a judge ruled that Hager, not Fortis, was to blame for those problems — though Hager cannot be sued because he is protected by his bankruptcy status.
Meanwhile, Hager’s 185 South 4th Street fell into foreclosure in 2012.
Hager and Lax had paid $42.6 million for the Williamsburg waterfront site back in 2007, hoping to construct several residential buildings. But Hager couldn’t make it work, and in September 2012, Chinese developer Xinyuan Real Estate bought it for $54 million and developed the 216-unit condo dubbed the Oosten, with units selling for as much as $6.6 million.
Hager also fell into foreclosure on the site of a planned 21-story condo tower in Downtown Brooklyn where he and Lax had partnered. The Chetrit Group took over the site in 2013, building a 12-story hotel and residential rental.
But sources say Hager’s recalibrated since the downturn.
“One of the lessons he learned is you don’t build everything,” said Junik, who has brokered several deals for Hager. “As a result of the downturn, he began to mitigate risk.”
When Hager resurfaced after the recession, he dropped the North Development Group name in favor of Cornell and started using his wife’s name on documents, suggesting an attempt to distance his name from past troubles. (Sources said Shifra is involved in Cornell, but her exact role is unclear.)
But while he is more conservative with acquisitions for development, he still enters and exits deals at lightning speed. He often sells before leasing launches or before construction starts. One source said, however, that he still avoids “stable, five-cap multifamily buildings with free-market units.”
Soly Halabi, president of institutional assets at Venture Capital Properties — a broker on Hager and LIVWRK’s Long Island City building purchase — said the developer is not afraid to “pull the trigger on deals.”
“Other people take their time thinking and debating, and then when they finally start to do something, the opportunity is no longer there,” Halabi said. “This guy sees the opportunity, and he embraces it.”
But it’s still not all smooth sailing.
On West 34th Street, Chetrit sued Hager in 2016 over a financial matter, though the compaies reached an out-of-court settlement. The partners had spent a year assembling a site for a retail complex. Instead, they each took 80 feet of frontage. Hager is planning a four-story, 35,000-square-foot retail project on his site, while Chetrit filed plans in 2016 for a 33-story hotel on its parcel. But according to Korn, Hager remains a majority partner in the overall project. “He originally assembled the deal, and Chetrit came in at the end,” Korn said.
Representatives for Chetrit did not respond to multiple requests for comment.
That’s not Hager’s only legal dustup.
Veteran lobbyist and consultant George Arzt has a lawsuit against him over what he said is roughly $27,000 in unpaid bills. The pair had a good relationship until about June, when Hager abruptly cut off communication, according to Arzt.
“He doesn’t pay his bills,” Arzt said. “I have not been able to get in touch with him in a long time.”
Arzt said his firm was lobbying and providing PR for a Crown Heights site where Hager wanted a rezoning. The developer withdrew the plans for a pair of 16-story buildings last year in the face of community opposition. “He owes lots of people,” Arzt said, “not just me.”
Joel Eisdorfer, who worked as a lobbyist for Hager on the Crown Heights project, said Hager owes him money as well, but he is less concerned. “I believe that he will pay, and I believe that he’s going to pay George, too,” Eisdorfer said. “He’s a good guy.”
In response to the allegations, Josh Nass, a spokesperson for Hager, said: “Like any businessperson of his scale, Mr. Hager who has engaged hundreds of vendors over his career, has come across one or two situations with vendors where miscommunications have led to the appearance of monies being owed. When in fact, no such monies are owed; and therefore any reporting to the contrary is a function of a misunderstanding.” Nass declined to comment further.
Despite the hurdles, Hager is forging ahead. He’s developing a 26-story hotel at 159 Broadway in Williamsburg and a Trader Joe’s-anchored commercial building at 200 Kent Avenue, where he’s partnering with LIVWRK. The two are also planning the Long Island City redevelopment.
LIVWRK CEO Asher Abehsera said he’s known Hager for 10 years and decided to partner on 200 Kent while they were acquiring adjacent Crown Heights development sites. Hager asked him to meet for a slice of pizza.
“From looking at him, you’d never know he had a dime or how he gets his deals done,” Abehsera said.
More dealmaker than developer
Although Hager’s résumé of completed projects isn’t as vast as some of his fellow Brooklyn developers, he does go after some of the city’s most complicated sites.
Hager was the second-highest bidder at the 2016 foreclosure auction at the Bauhouse Group’s ill-fated development site 3 Sutton Place. Hager, the stalking-horse bidder, spent the auction on the phone with his investors. (He often syndicates equity on deals from members of the Hasidic community such as Pincus Neiman, best known for selling a Williamsburg site for $165 million to Eliot Spitzer.)
“He’s much more of a dealmaker than a developer,” a source said. “He went over budget on a few deals and lost his shirt. But we’re in a market now where it’s not as easy to flip.”
Hager cuts a different personality than many real estate players from his community.
Sources said he either drives or gets chauffeured around in a gray Chevrolet Suburban and that he attends major industry events, where he’s often the only Hasidic person.
Maundrell recalled Hager spotting him on a red-eye flight back from the International Council of Shopping Centers conference in Las Vegas in 2016 and shouting his name across the crowded plane.
“Ninety-nine percent of those guys won’t do that,” Maundrell said, referring to the Hasidic community.
MNS’ Highlyann Krasnow, who handled predevelopment planning for two of Hager’s projects, pointed to his frequent use of expressions such as “Mo money, mo problems,” a reference to the Notorious B.I.G. song, and other rap lyrics.
His attorney Jeffrey Zwick, meanwhile, cited his client’s affinity for the Macarena.
Hager frequently goes out to dinner with real estate players at the upscale Manhattan kosher restaurants Le Marais, Mike’s Bistro and Reserve Cut, said Meridian’s David Schechtman. Many of his contemporaries would not be caught dead at these flashy hotspots.
Junik said Hager sees the upscale dining as essential to dealmaking, which comes only second to religion. Sources say he observes Shabbat, but by as early as 7 p.m. on Saturday, he’s back to calling business associates.
And he has plenty of partners to show for it, including lenders like Hudson Realty Capital, Madison Realty Capital and L&L Capital Partners.
Hudson co-founder Spencer Garfield, who left for Fortress Investment Group in 2015, said he’s provided Hager with 12 acquisition loans at both companies.
“He hustles, meets with everybody and works very hard to find deals,” said Garfield, who specializes in loans over $100 million but works with Hager in the $35 million range.
Schechtman, who has brokered six of Hager’s deals, said Hager is a man on the move. “Three years ago, he was sitting in my office and I noticed his shoe looked worn underneath,” Schechtman said. “I said, ‘Itzy, you have a hole in the sole of your shoe!’ He was shocked — he hadn’t noticed. He was running all over Brooklyn, Manhattan and Queens.” That perpetual motion, he said, hasn’t changed.