Lunch at the Tribeca Grill with: Ofer Yardeni
Published by The New York Sun on 2005-04-14
"I really think that people who weren't born in New York City appreciate it even more than those who come from this place," Ofer Yardeni, principal of Stonehenge Partners Inc., said. "And people who weren't born in this country appreciate New York even more. New York is where the world meets. New York is where the American Dream can be realized."
He should know. Mr. Yardeni, the son of an Israeli steel worker, hails from Bat-Yam, a small community not far from Tel Aviv. After majoring in history at Tel Aviv University and serving three years in the Israeli Army, he came to America in 1986 to study history at New York University.
Less than two decades later, Mr. Yardeni has become a star of the city's real-estate industry. His transactions have been in excess of $2 billion. His company owns 15 residential and commercial buildings in the city; his management company has a staff of 30; and he employs another 150 people at his various properties. Stonehenge, which owns and manages assets of more than $700 million, has given its investors returns in excess of 35% on original equity since 1994, when Mr. Yardeni founded the company with Joel Seiden.
Earlier this month, his company acquired The Pennmark, a 33-story, 600,000-square-foot mixed-use building. It contains 333 luxury residential units, and 300,000 square feet of commercial space. Stonehenge paid $244 million, representing the second highest price paid for a residential building this year.
"I am really a living proof of the American Dream," Mr. Yardeni said over lunch. "I've always felt comfortable in this city. Being foreign is not a handicap here, as it is in Europe - where, no matter how much you invest, you're always looked upon as a foreigner. But here in New York I am considered a local player. The greatness of the city is that it gives everybody a wonderful opportunity to succeed."
When he came to America, of course, Mr. Yardeni had no clue that he would wind up in real estate. He was just one of the 350,000 foreign students who enroll in American colleges and universities each year.
"I hadn't even remotely thought about real estate," Mr. Yardeni said. "In fact, I always thought that real-estate people were somewhat arrogant - when they go to basketball game and the crowd cheers, they feel they are being cheered, and not the ball players."
He said this with a chuckle; humor, Mr. Yardeni said, often softens "complicated situations."
Good humor, an ability to size up people and situations, and enormous self-confidence, are personal assets that have served Mr. Yardeni well. So has unending curiosity about architecture. In fact, he said, he fell in love with New York's architectural diversity in his student days when he would explore the city's neighborhoods on foot. That's also when he conceived of a career in real estate.
His first job was as a broker with LB Kaye, where he quickly made a mark as a go-getter. He recalled how stunned he was when, one year, he received his annual income statement of $500,000.
"My hard-working father Itzhak, in his entire life, had made less than the equivalent of $300, 000," Mr. Yardeni said. "And here I was, making this kind of money at such a young age. It was unbelievable. Only in America. Only in New York."
As a real-estate broker in city known for its hyperkinetic customers, he learned how to deal with people. He learned to be tactful. He learned to be patient. He learned the value of educating himself about every aspect of the properties he was showing. He learned how to negotiate contracts. He learned how important it was to be candid in catering to clients.
"I was never pushy, I would listen to people, and if I made a mistake, I would readily admit it" he said. "I discovered how much I enjoyed the company of total strangers with whom I had to deal in my work. I also discovered that people seemed to like me."
And he discovered that he yearned to be on his own. So he formed Yardeni Investments, where he focused on multifamily and commercial investment sales for seven years. Through serendipity, he met Valero Wagner, a Montreal investor who also introduced him to sources who came through with Canadian funds. He also befriended the legendary Kamran Hakim who, Mr. Yardeni, "taught me more than what I could possibly ever absorb."
Another mentor was Nathan Tanen, also a major figure in the real-estate business.
"They showed me the way," Mr. Yardeni said. "I've found that in this city, people like to help newcomers and underdogs. But you must be sincere. You must be always ready to learn from others. I learn from the masters. I never let my ego stand in the way of acquiring knowledge."
His rabbi, Yeoshiyahu Pinto of Israel, is another such master, one who has imbued him with much spirituality, Mr. Yardeni said.
He also credited his partner, Mr. Seiden, for teaching him "how to look at the big picture."
And what's the big picture in his own case?
"That I'm a lucky man," Mr. Yardeni said. "But also that I'm entitled to my success because I work hard for it. Perhaps the difference between me and some others in this business is that I'm always willing to find ways to get things done."
That, translated into real-estate parlance, means Mr. Yardeni concentrates on acquiring, managing, developing and financing multifamily real-estate assets, primarily in Manhattan. Stonehenge acquires buildings in desirable locations in close proximity to public transportation hubs, including properties that consist primarily of studio and one-bedroom units with rents approximately 50% below market rates, Mr. Yardeni said.
"These buildings naturally generate the highest amount of tenant turnover and are in constant demand," he said. "We target properties with rents at approximately 50% of the market and purchase prices with values well below replacement costs."
Mr. Yardeni said that Stonehenge largely attributes its success to its ability to maximize the value of its properties within the framework of these laws.
He acknowledges that he's been fortunate to have had a handful of longtime investors - the so-called "patient capital" -- including Caisse de Depots et Placements Capital (CDP), the investment manager for the Quebec Pension Plan. Stonehenge and CDP Capital also own the Ritz Plaza, a 479-unit luxury high-rise with commercial elements, located in the heart of Time Square.
For man of 45, all these are formidable accomplishments, especially in a city with relentless competition. Where does he go from here? Is Mr. Yardeni now tempted to expand his real-estate empire overseas?
"No doubt I will continue what I'm doing now with great passion," he said. "I always said that when I'm big enough I would like to develop a building from the ground.
"But going abroad? Real estate is a local business. What that means is that if you go into any city - say, in Europe - you have to have a good local partner. Besides, there's 400 million square feet of commercial property in Manhattan that beckons, and a large amount of residential space. There's plenty for me to do in New York."
"And there's another reason for focusing on New York," Mr. Yardeni said. "My family is the single most important thing for me - my wife Shari, our three children Max, Josh and Olivia. I'd rather do business not far from my family."
His children are 12, 10 and 6, respectively, so perhaps it's a bit early to expect them to decide on a career, and especially to inquire if they wanted to follow in their father's footsteps.
But, the reporter asked, in addition to his emphasis on acquiring knowledge, and his personal honesty, straightforwardness, and philanthropy - he and his wife were recently honored by AmFAR for their contributions to AIDS funds - what did he teach his children?
"Optimism," Mr. Yardeni said. "I tell my kids that in America you can be whatever you want to be. But you must put your mind to it."
Senior Writer and Global-Affairs Columnist