In January, Avi Schron did something his father Ruby never had.
On behalf of Cammeby’s International, he filed plans to build a new 41-story tower in South Brooklyn, the first major solo ground-up development by the family firm in its nearly 50-year history.
When New York real estate folk talk about “old-school investors,” they’re often picturing Rubin Schron. Starting Cammeby’s in 1967 with a handful of Bronx properties, he parlayed those modest holdings into an enviable portfolio that includes the Woolworth Building, Industry City and over 15,000 apartments. While many of his peers moved into development, Schron, who Bloomberg estimates is worth about $1.6 billion, stuck to what he knew: measured investment plays, long-term multifamily holds and shrewd partnerships on office and industrial properties.
Though he remains a force even at the age of 78, his sons Avi and Eli are beginning to shape the future of Cammeby’s, pushing the company into ground-up projects and more audacious acquisitions.
“When a family makes a big shift in perspective and appetite, it’s generally based on what the next generation wants to do,” an industry source who has worked with the Schrons said.
Inside Cammeby’s
With thin, dark hair, a light gray beard, wire-frame glasses and a heavy Brooklyn accent, Ruby could be mistaken for any number of dark-suited businessmen plying their trade in the borough. And he seems to prefer it that way. He explained his notoriously media-shy stance in a rare awards speech last year, saying: “If you run away from honor, the honor will chase you.”
Even within his own community, Ruby avoids the limelight. At a 2009 event he hosted in Jerusalem for Sukkot, Ruby, sporting a Borsalino fedora, refrained from clapping or singing along to catchy Yiddish songs, in sharp contrast with his surrounding peers in shtreimlech and fedoras.
Cammeby’s, through a spokesperson, declined to comment for this story.
[vision_pullquote style=”1″ align=””] “If you run away from honor, the honor will chase you.”- Ruby Schron [/vision_pullquote]
Lightstone Group’s David Lichtenstein told The Real Deal in 2012 that Ruby is “the type of person who when you meet him, you think, ‘That is what it was like in the olden times.’ He drives a simple car. He doesn’t have a secretary with an English accent.”
From left: Eli and Rubin Schron (credit: Agudath Israel)
Avi and Eli — two of his eight children — work very much in the mold of their unassuming father, said Philip Eisenberg, the founder of Urban American Management and a longtime business associate of the Schrons.
Like their father, the two sons — Eli is in his mid-40s and Avi is in his late 40s or early 50s — practice Haredi Judaism, the most conservative form of the Orthodox faith. They have been heavily involved in the firm’s decision-making since the early 2000s, sources said. Eli handles acquisitions and financing, while Avi takes on building management, operations and renovations, according to Jean Celestin, a managing director at Eastdil Secured who, along with Douglas Harmon, has brokered several deals for Cammeby’s.
Some developers and brokers meet with one of the sons, depending on the matter – or go to Ruby directly. The sons and their father have a free-flowing working relationship, developer Steve Witkoff told TRD.
“He doesn’t act as their boss – he’s not patronizing to them,” he said, referring to Ruby. “When children come into the business, things can obviously change. They form their own personality, and can be hangers-on or act entitled. I’ve never seen that with Ruby’s kids.”
But there are certainly generational differences. Michael Phillips, the president of Jamestown Properties, which partners with Cammeby’s on the giant Industry City complex in Sunset Park, said he is “always struck” by Avi’s tech savvy, which the younger Schron uses to generate ideas about prospective office tenants. Avi studies website analytics and the correlation between broker tours and sales, to better manage and market Cammeby’s buildings, Phillips said. This tech-forward perspective will be key to the firm’s future, he added.
“There are real estate guys with a BlackBerry from five years ago, and there are some well-versed on electric load management and battery backup in their buildings,” a source said.
[vision_pullquote style=”1″ align=””] “He doesn’t act as their boss – he’s not patronizing to them. When children come into the business, things can obviously change. They form their own personality, and can be hangers-on or act entitled. I’ve never seen that with Ruby’s kids.” — Steve Witkoff [/vision_pullquote]
Real estate dynasties are always grappling with the question of succession.
“You build your business and fall in love with it,” said Henry Elghanayan, CEO and founder of Rockrose Development, who does not know the Schrons. “It becomes your life’s work and you want to carry it on. I’m going to work until I drop.” But now, he said, his primary responsibility is the smooth transfer of power to his son Justin, who serves as the firm’s president.
According to Justin, the two recently clashed over the fate of several low-rise retail buildings they bought near their proposed 975-unit Long Island City tower at 43-25 Hunter Street. Justin sought to lease the spaces to local restaurants and mom-and-pop shops, to retain the neighborhood’s character. Henry, however, argued that demolishing the buildings and adding to the tower’s floor plates was a more efficient use.
“He expressed hesitance,” Justin said, “but he let me run with my vision.”
Said Henry: “There is no doubt things will be lost without me there. I’m hoping there’d be more gained than lost.”
Boardwalk Empire
532 Neptune Avenue (Credit: New York YIMBY)
The slender 41-story tower at 532 Neptune Avenue is expected to hold 544 rental apartments and span 673,000 square feet. S9 Architecture, an affiliate of Perkins Eastman, is the architect of record for both projects, replacing SLCE Architects. Though in its early stages, the project is already facing opposition from City Comptroller Scott Stringer and Coney Island residents, who claim it would be out of character with the neighborhood.
[vision_pullquote style=”1″ align=””] “I’m seeing a lot of folks buying only income-producing properties now looking at development because the yields are so low.” — Bob Knakal, Cushman & Wakefield [/vision_pullquote]
Cammeby’s paid $25 million in 2013 for the Trump Village Shopping Center on the site. Then, in January, the firm paid $18.1 million for a retail building around the corner. Along with the tower, it is planning a four-story commercial building with community space.
The project, slated to be the tallest in all of South Brooklyn, is a breakaway from Cammeby’s regular strategy.
“The development play surprised me,” said Rosewood Realty Group’s Aaron Jungreis, a top multifamily broker who represented Cammeby’s on a handful of deals. “Maybe they did it because it’s Coney Island, where there is a cheap price per square foot and they can get their feet wet.”
Witkoff echoed this, saying, “Development hasn’t been Ruby’s thing, but he’ll do it if he believes he can make the numbers work.”
The average rent in Coney Island is $18.26 per square foot, according to Brownstoner data. The median sales price for condos, co-ops and townhouses in South Brooklyn was $292,000 in the second quarter of 2015, according to the Corcoran Group.
It’s not clear if this is the first of many development projects for Cammeby’s, or whether it’s simply a reflection of sunny market conditions.
“I’m seeing a lot of folks buying only income-producing properties now looking at development because the yields are so low,” said Bob Knakal, chairman of New York investment sales at Cushman & Wakefield.
Celestin is skeptical of talk of changes in the firm’s organizational structure, saying the Schron family is “still very conservative by nature.”
“I don’t see them taking a risk on a big scale,” he said. “We showed them development sites and they have no interest.”
Ruby has met with underwriters and advisers on multiple occasions to explore a bond offering, but he is not considering it at this time, sources said.
Still Teaching
The Woolworth Building
Cammeby’s has 362 assets nationwide, with an estimated property value totaling $13 billion, according to Real Capital Analytics. New York City apartment buildings make up the bulk of these holdings.
Nationally, the firm owns about 5 million square feet of office space, 73 apartment buildings; 186 nursing homes (in 22 states); and at least $150 million in non-real estate assets.
Among the biggest holdings: the lower floors of the Woolworth Building (with other investors) and an 885-unit portion of the Trump Village complex in Coney Island and Brighton Beach, which Cammeby’s extensively renovated in 2010.
[vision_pullquote style=”1″ align=””] “At some point, these boys will be taking over. But for now, he [Ruby] gets the last say.” — Jean Celestin, Eastdil Secured [/vision_pullquote]
In June 2013, an attorney for Malkin Holdings received an unsolicited offer from Cammeby’s to purchase the Empire State Building for $2 billion, all-cash. The offer came as Malkin was preparing to create a real estate investment trust with the skyscraper.
Ruby sought to jump on a “potential opportunity to buy an iconic asset,” said Stephen Meister, an attorney who represented the Empire State Building shareholders not on board with Malkin’s plan. Meister added that Ruby himself was behind the bid, not his sons. The bid was ultimately unsuccessful, and Malkin went ahead with the creation of Empire State Realty Trust.
Ruby was no stranger to trophy deals — in 1998, he partnered with Witkoff to buy the Woolworth Building for $146 million. The pair then sold the top 30 floors to an Alchemy Properties-led group for $68 million in 2013.
Behind the story:
532 Neptune Avenue
And Cammeby’s continues to show a voracious appetite for New York product. In November, it bought the land under 100 West 57th Street (with David Werner) for $285 million. In March, it took a majority stake in a 241-unit Murray Hill rental building at 30 Park Avenue for $194 million. That same month, the owners of Industry City, with Cammeby’s as a key investor, announced a $1 billion makeover at the Sunset Park complex.
Last year, Cammeby’s bought 10 apartment buildings on the Yeshiva University campus for $72.5 million. Knakal, who brokered the deal, said Ruby pursued the portfolio aggressively. In less than a week, he toured the buildings, conducted the lease review and signed a hard contract, a process that Knakal says usually takes a prospective buyer three to four weeks.
“He is a deep-pocketed investor who doesn’t have to raise equity to close transactions,” Knakal said.
The firm’s primary partners include David Werner Real Estate, Jamestown Properties, Angelo Gordon & Co., Belvedere Capital and Witkoff.
His go-to sources of institutional lenders have been Deutsche Bank and NorthStar Realty Finance Corp, according to Real Capital. Deutsche Bank refinanced Cammeby’s nursing homes for $940 million last year. In July, the firm refinanced 45 Broadway for $95 million from Cornerstone Real Estate Advisors.
On the mortgage side, Schron’s strongest relationship has been with Meridian Capital Group’s Ralph Herzka, who said in an Agudath Israel of America video last year he has represented him for almost 30 years.
“When you mention his name, all the banks say is: ‘If everyone was Ruby Schron, we wouldn’t have any issues,’” Herzka said in the video.
But will Avi and Eli be able to maintain the track record that’s made the quiet Cammeby’s one of New York’s most powerful landlords? Sources said the traits they share with their father, like intelligence and deliberateness, will take them far.
“At some point, these boys will be taking over,” Celestin said. “But for now, he [Ruby] gets the last say.”
“He’s still teaching.”
Correction: A previous version of this story misidentified the owner of LeFrak City. It is LeFrak.