Empire Capital’s Josh Rahmani and Ebi Khalili; 1330 Avenue of Americas (Empire Capital, Getty, 1330 Avenue of the Americas)
Josh Rahmani and Ebi Khalili have come a long way from their days hustling Brooklyn real estate for others.
The duo, who got their start in the brokerage business, are now in contract to buy a 40-story tower at 1330 Sixth Avenue from RXR Realty and Blackstone Group for $320 million. It’s a meaty deal that will get them noticed by the New York market’s biggest players.
Rahmani and Khalili, who are cousins in their late 30s, are on a buying binge in Manhattan. In addition to the 1330 Sixth acquisition, their firm, Empire Capital Holdings, teamed up with retail landlord Igal Namdar last year to buy a Midtown South office building at 345 Seventh Avenue for $107 million.
They’re also in negotiations to buy 830 Third Avenue, a 14-story office property, as well as a retail condo in Lower Manhattan, according to a source familiar with the deal.
Sources familiar with their operation said they are fueling their acquisitions with the backing of families in their close-knit Persian community as well as with institutional money.
Rahmani and Khalili did not respond to requests for comment and their former partners declined to go on the record.
The pair largely avoided the press until 2015, when they were protagonists in a scorched-earth legal battle with their cousins and former business partners, Joseph and Daniel Rahmani, who they allegedly fired and locked out of their office over stealing commissions.
At one point, Khalili allegedly told Joseph and Daniel Rahmani, “You stole millions of dollars from the company; you are both fired; get the fuck out of here, don’t ever come back!,” according to a complaint. The litigation was settled in 2017.
Since then, Rahmani and Khalili have turned away from brokerage and devoted their energy to acquisitions. In 2016, they picked up the trendy 64-key McCarren Hotel in Williamsburg, which they were able to refinance in February. They also bought retail assets in Soho and Tribeca as well as 35-37 East Broadway, a former gambling den in Chinatown.
“God willing, we are going to buy over $1 billion in this market.”
Their new focus on office has some perplexed. What do Rahmani and Khalili know that Blackstone and RXR don’t? People close to the new buyers said they have the funds to spend what it takes to modernize the space for tenants. And now that prices have fallen — RXR had paid $400 million for 1330 Sixth in 2010 — they have a chance to get into the game.
Their rise follows a pattern commonly seen in New York real estate: from peddler to player.
Rahmani got his real estate license in 2004 during his first semester at Adelphi University. By the end of the second semester, he claimed to have brokered over $100 million in properties and acquired three of his own that year, according to his website.
Khalili’s first real estate gig was at Franklin First Financial, a mortgage lender, in Long Island. At 20, he co-founded Venture Capital Properties, an investment-sales focused brokerage, with Rahmani. The firm specialized in off-market deals and took off in part thanks to Soly Halabi, a hotshot broker who represented Mexican billionaire Carlos Slim.
By 2013, Venture Capital Properties cracked The Real Deal’s top 20 investment-sales firms, with over $250 million in deals. According to their website, some of the firm’s deals include Eliot Spitzer’s acquisition of 430 Kent Avenue and the Beekman hotel in Lower Manhattan.
But as their profile grew, so did the internal tensions. By Rahmani’s account, he and Khalili were doing all the work, while Joseph and Daniel failed to contribute.
Rahmani and Khalili alleged that Joseph and Daniel received a $540,000 commission from Sitt Asset Management’s $27 million sale of rentals in Brooklyn’s Midwood neighborhood, but never reported the sale’s closing to the firm.
Khalili and Rahmani asked Daniel and Joseph about the deal, but alleged that “Daniel arrived in a fit of rage and, among other things, threatened to stab me,” according to an affidavit. The brothers had to be restrained by colleagues and escorted out of the building, according to the affidavit.
Daniel and Joseph meanwhile, alleged that Khalili and Rahmani cut them out of their own business, and claimed they used the brokerage as a personal piggy bank. They also allege that they were subjected to years of mistreatment and abuse.
The cousins are now on good terms, according to sources, with some mentioning that they saw them dancing together at a recent wedding in Great Neck.
It’s difficult to pinpoint the exact source of Empire Capital’s funds. Sources said most of their money comes from wealthy families and high-net-worth individuals, who are not in a rush for quick returns. That gives Empire Capital more time to complete its office plans, while also giving them access to better and cheaper sources of financing. (For 345 Seventh Avenue, Khalili and Rahmani secured a $70 million loan from Benefit Street Partners).
Their one visible partner is Igal Namdar, a fellow contrarian whose firm, Namdar Realty, has been buying up Class B and C malls on the cheap. He now owns or manages over 57 million square feet of commercial real estate throughout the country.
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So far, Rahmani and Khalili’s only known problem asset is 430 Broome Street, a residential and retail building in Soho. Bixby Bridge Capital, which bought Empire’s loan from Sterling National bank, alleges Empire defaulted on a $8.1 million loan and is seeking to foreclose. The foreclosure suit is still pending.
“I really would appreciate it if you can work with us in solving this issue” Josh Rahmani wrote in an email to Sterling National Bank last year, according to a lawsuit filed in New York Supreme Court. “Retail was closed for a year by the government and we still carried it. Please do right by us.”
People close to Rahmani and Khalil described them as consummate entrepreneurs, with businesses such as Prime Essentials Rx, an independent pharmacy business, to Think Empire, an online terminal for commercial real estate data akin to PropertyShark. Rahmani said last year that he planned to merge Think Empire with his advisory business to take it public.
“We are producing something like Yahoo Finance for properties, Moody’s to rate banks & sponsors positions/portfolio, and a digital exchange like Coinbase for CRE,” Rahmani said in an email found in court filings.
Meanwhile, in the real estate world, it’s their latest acquisition that’s drawing attention.
Though Rahmani and Khalili are paying just $615 per square foot for the 1330 Sixth property – compared to the $770 a foot RXR paid or the over $950 a foot Harry Macklowe paid in 2006 — they’re taking over the property at a time when office as an asset class has a serious question mark on it. Their plan with the property isn’t quite clear, but their overall ambition and hustle certainly is.
“We are geared up to go on an acquisition spree with new partners.” Rahmani said in an email last year filed as part of a lawsuit. “God willing, we are going to buy over $1 billion in this market.”