Rick Aidekman and the Crazy World of NYC Landlords-Part 5

This entry is part 5 of 14 in the series Rick Aidekman and the crazy world of NYC Landlords

Rick Aidekman and the Crazy World of NYC Landlords-Part 5

It’s been a few months since I wrote my last article.   I missed the writing and am back to bring new stories of the odd characters in NYC real estate.    To get back into it, I am posting some stories that involve unique people and sometimes crazy ones.    The first is more about trust.    

One individual that I always think of when I am looking back at my experiences is an individual who, with a partner, was highly successful in building a portfolio of  eleven large residential properties in Manhattan.   In addition to these properties, he also owned a large midtown hotel, another by JFK and, a fitness club in one of his Upper East Side high rises.    When his partner died, he decided it was time to cash in on the high rises.   Problem was that he didn’t trust anyone, no matter how large, or how small the prospective purchaser’s company was.    I will refer to him, for ease of writing, as Mr. T.   The fact that he was willing to sell his portfolio of 11 high rise properties in Manhattan, was well known to most large real estate companies, but not to me.   I heard about it on a plane ride to Houston where I was advising an investor friend on whether he should invest in a multi-family portfolio in that City.   More on that later.   

I was on the flight with the investor/friend as well as an attorney (who later became a good friend) who was representing the developer in Houston in raising equity for his project.   On the flight, he asked if I was familiar with Mr. T’s portfolio that was for sale.  I did not and told him so.   He provided me with the basic information and told me that a broker friend of his would get me more information upon our return to New York.     Turned out that Mr. T had decided on a price of $270 million for his portfolio of 11 properties.   It also turned out that, as I stated earlier, that all the large buyers in the US had known about the portfolio for months and many had offered the asking price.    Mr. T had one major issue in making a deal with anyone.   He hated people and trusted nobody.

For me, this became my opportunity.  

Through the broker, I obtained Mr. T’s name and office phone number.   He was located in Long Island, New York, not far from Manhattan.    As I had a minimal amount of information on the properties, but it was enough to realize that his price was very favorable and below what he could achieve if he put it up for a bidding war.   I realized that I had to distinguish myself and our company from competitors that were 10 times our size.  

My first move was to call him.   Which accomplished nothing.   I then decided to show up at his office and introduce myself.    To my shock and surprise, he welcomed me and accepted my invitation to lunch.    He then spent the better part of the hour telling me how his life was filled with a history of people “screwing him” one way or another.    Clearly, this was his issue with making any deals.   I knew that distrust was an issue, but it was a very strong problem with his view of the world.   I had to gain his trust.   With that in mind, I never mentioned the deal, other than to say that the portfolio was the reason that I found him.   I talked about positive things, such as, what it was like to have Prudential as a partner.   In my mind, and as I expressed to him, there was no better, more honorable group, then the team at Prudential.   I also talked about my partners and my standard line about my long-term partner, which was a truism.   I would always tell people how if he found an envelope with a million dollars on the floor in one of our buildings, he would bring it to me and say, “What do you think I should do with it?”

Mr. T liked hearing about my experiences with good people and good companies.    I came back about a half dozen times to have lunch and discuss the world in general, never bringing up the specific portfolio.     Eventually, it dawned upon me, that, in a sense, I was acting like most people, in that I was not being straight with him in the fact that I was having lunch with him to get to his portfolio.    I also came to the realization, that talk alone would not convince him that I was trustworthy.    It then dawned on me a way to get him over the hurdle.  

I discussed with my partner my idea, he agreed and then I put it in writing, and went to meet Mr. T for lunch.   I created an offer, in writing, as follows:

We would pay the $270 million he offered.    We gave him a check of $250,000 to be applied against the purchase price.   What was unique and a bit crazy was that in the offer letter we said the deposit was his to keep, whether he agreed to sell, or not.     I repeat, he could keep the $250,000 whether he sold to us or not.   It was our statement of our trust in him.    Needless to say, he was blown away by what he considered a statement of friendship and trust and at the moment agreed to sell the portfolio to us.

I explained to my partner, that if he hadn’t agreed, we would have each been out $125,000, which after taxes, was about $80,000 each.   A risk worth taking to control a portfolio of this size.

We closed three months later and made the front page of the Wall Street Journal as the largest multifamily purchase of the year.  

More about the Houston trip in Part 6

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