CLIENT NEWS: The Man from Morocco, The Untold Story of Joseph Chetrit
June 8, 2022Though his close friends and family might quibble over the precise ingredients required for a good Joseph Chetrit story, they can all agree on one thing: There’s probably a negotiation involved.
Robert Verrone’s favorite took place during the 2006 FIFA World Cup, when the top debt broker and his father attempted to enter a soccer stadium with Chetrit, Chetrit’s wife Nancy and their four children. Verrone had secured prime fourth-row seats, and the group had flown into Germany for the clash. But when they got to the gate, the ticket agent informed them that Chetrit and Nancy’s tickets were counterfeit.
Verrone begged Chetrit to take his tickets so the developer could sit with his kids. But Chetrit, a bespectacled, mustachioed, rotund Moroccan émigré, insisted in his thick French accent that he and his wife would happily watch the game on television. Verrone then procured a new pair of tickets, these ones in the nosebleeds, and once again attempted to get Chetrit to take his seats. Instead, once inside, Chetrit simply proceeded to his original seats, spotted two empty seats nearby and presented his bogus tickets to the couple sitting in his original seats.
“You’re in my seats,” he said. A security guard was summoned. Chetrit negotiated for the open seats nearby — which he then traded with the people in his original seats.
The deal was textbook Chetrit, marked by equal parts charm and chutzpah, and the kind he’s done in skyline-defining contexts. The founder of the Chetrit Group has wheeled and dealed his way through trophy properties such as the Sony Building, the Hotel Chelsea, the old Daily News building at 450 West 33rd Street, and is developing what’s slated to be Brooklyn’s tallest skyscraper. He is the largest owner of new apartments in Jamaica, Queens. He has developed a pair of megablocks on the Upper West Side. And he has tangled in court with a murderers’ row of other big-name developers, some of whom are former partners, including Gary Barnett, Michael Stern and Joseph Tabak.
Chetrit’s real estate pursuits extend well beyond the city’s borders. In 2004, he paid about $900 million to buy Chicago’s iconic Willis Tower (formerly the Sears Tower), along with Joseph Moinian and American Landmark Properties, realizing a hefty profit when he sold it to Blackstone Group for $1.3 billion in 2015. He owns tens of thousands of apartments around the nation, though last April he sold a 5,500-unit multi-state portfolio for $390 million. He’s developing a $1 billion mixed-use project in Brickell, dubbed Miami River. And that’s just in the U.S. — he also owns properties in Israel, France, Peru, Canada, and his native Morocco.
Now 64, Chetrit hasn’t slowed down one bit — if anything, the last two years have seen a flurry of dealmaking. In May, he and Larry Gluck’s Stellar Management closed on the $714 million refinancing of two luxury Upper East Side rental towers. Over the last six months, he’s acquired more than 100 condo units at the Hollywood Beach Resort, a storied oceanfront property in Florida that he hopes to redevelop. In April, he paid $78 million for the “Two Bridges” development site on the Lower East Side, at 265 South Street, where CIM Group and L+M Development Partners filed plans for a 1,300-unit, two-towered building. The project has been the subject of legal and community wrangling for years and is likely to be included in the state’s 421a property tax incentive, which is set to expire in June.
Despite his penchant for megadeals, little has been written about the origins of the massive Chetrit portfolio or its press-shy steward — in large part because he has done everything he can to evade the spotlight.
He never grants media interviews, and in the handful of profiles that have been written about him, details about his early years are thin and he has sometimes been described in ways that carry a hint of menace. In 2011, the New York Observer called him the “Most Mysterious Big Shot in New York Real Estate.” Like Lloyd Goldman and Ruby Schron, Chetrit, it noted, preferred to “deal in the shadows, content to cultivate auras of savviness and even fear, emerging only reluctantly.” The New York Times called him “secretive,” describing him as a “stout, blunt-talking man with a mustache and an old felony conviction,” who “guards his privacy fiercely.” Within the real estate industry, Chetrit’s seemingly limitless resources — the Observer noted he has been known to demonstrate his deep pockets to sellers by showing them a checking account with over $100 million in it — has led to widespread speculation about the origins of his fortune.
Chetrit, of course, declined to be interviewed for this article. Those who know him insist his aversion to the press stems from an old-school adherence to the idea that it would be immodest to put himself out there, rather than any desire to cultivate secrecy. One member of the Chetrit family, however, agreed to share Chetrit’s origin story as well as the beginnings of the real estate empire with The Real Deal, in an effort to set the record straight and dispel some of the rumors surrounding the mogul.
Rabbinical roots
Chetrit was born in December 1957 in Erfoud, Morocco, an oasis town in the Saharan desert that has served as the backdrop for numerous Hollywood films such as “The Mummy” and the James Bond flick “Spectre.” For generations, the town was a renowned rabbinical center, producing some of the greatest masters of the Kabbalah. Chetrit himself came from a long line of rabbis.
Dealmaking was woven into the town’s historical fabric. In addition to Jews, who had lived in Erfoud for millennia, the desert town had been settled by Bedouin traders as Morocco had emerged as a strategic hub on the Silk Road.
Chetrit’s father, Simon, opened a modest shop and began trading items. Simon had a knack for mathematics, and, decades later, during Passover Seders, he would entertain his grandchildren by allowing them to delegate one emissary to approach him at the head of the table with the most difficult mathematical equation they could produce. They would consult a calculator and write it down, and then the emissary would recite the equation, rapid fire — “17 times 4 minus 2, times 3, times 6, times 8, times 9, divided by 2 plus 1 times 7.” Simon would, without fail, do the math in his head and tell them the right answer.
“Until today, he is just exceptionally gifted with math,” said the Chetrit family member, who noted that Joseph had inherited his father’s facility with numbers.
Simon parlayed his talents into enough capital to start a textile import-export business. Soon after Joseph was born, Simon moved the family to Casablanca and the business continued to grow. His son developed a fascination with America, plastering the walls of his room with Hollywood movie posters and Americana. As a teen, he rode around Casablanca on a motorcycle painted with an American flag.
“When he [Chetrit] was growing up, there was an emergency in the world, the American soldiers were on the ground and they were there to help everybody be what America is — the land of the free and the guardian of the world,” said the family member. “And he wanted to be a part of that. He aspired to be part of that.”
The standard path for the Moroccan youth elite of that time was from Casablanca to Paris. Chetrit instead headed to New York City, and the 17-year-old began putting his own talent for math — and his blossoming powers of negotiation — to work. He set about expanding the family import-export business, focusing in particular on raw textiles like polyester, Lycra and used clothing, selling them all over the world.
Chetrit’s initial investments in real estate were related to this “schmatta” business, acquiring warehouses and other commercial properties — a path taken by other real estate players who started off in the garment trade, such as Joseph Moinian and Yair Levy.
But there were legal troubles. In 1990, he pleaded guilty to evading customs duties by illegally importing more than 1.5 million square yards of fabric into the U.S. from Korea, shipping it through France and disguising its origin. He was sentenced to 250 hours of community service, fined $10,000 and given three years probation. His lawyer at the sentencing hearing, according to the Times, said Chetrit had lost his business as a result of the charges. But the family member insisted that was not true — Chetrit, he said, decided to transition out of textiles and into real estate in the early 1990s because he wanted to spend more time with his growing family and no longer wished to travel so much. The garment trade funded many of the real estate acquisitions that followed, the family member said.
If the catalyst for the career shift is up for debate, Chetrit’s success at it is not. Within just a few years, he had amassed a portfolio of outer-borough residential buildings in Queens and Brooklyn, which he sold for $70 million in the early 1990s.
In 1994, Yoron Cohen, at the time one of the top investment-sales brokers in the city, received a call from a mysterious man with a thick French accent. Introducing himself as Joseph Chetrit, the man informed the broker that he wanted to buy a commercial property at 19 West 44th Street.
“Well, excuse me,” Cohen recalled telling him, “it’s nice to meet you on the phone, but we don’t work with anyone we don’t know.”
Ten minutes later, Chetrit appeared in his office at what is now the MetLife Building with his brother and father, neither of whom, at the time, seemed to speak English.
“This is my family,” Chetrit said. “We are here. Now you know me. We owned some residential real estate, but we want to go into commercial. And we heard about you selling 19 West 44th. We like the building and we are quick actors. We would like to buy it from you.”
Cohen took the measure of the trio as Chetrit proceeded to describe the residential portfolio he had built — buildings far smaller than the one he was now trying to nab. He could tell right away that the Chetrits were not the “institutional type” and weren’t interested in discussing “cap rates” and “IRR.”
“They looked as if they just came off the boat from Morocco,” he recalled. “Just the way they were dealing. These guys were not real estate investors. They were traders — buy low and sell high. They were just very pragmatic, they were looking to buy a building like you buy furniture. They were coming in with a lot of energy.”
They also spoke a little bit of Cohen’s native Hebrew, were pleasant and friendly, and quickly developed a rapport with the broker. And crucially, they were represented by a reputable real estate attorney who Cohen had previously dealt with.
The deal was a good one. The property was owned by Joseph Neumann’s Broadway Management. But Hyperion Partners, a lender headed by the pioneer of mortgage-backed securities, Lewis Ranieri, had put the building into foreclosure. Chetrit knew that the building was in trouble and there was an opportunity for a bargain. By the time they were done talking, it was late. The group departed the MetLife Building together, and Cohen watched as they flagged down a taxi and headed in the direction of 44th Street — intent on viewing the building, even if only from the outside. Cohen knew they meant business.
The following week, the entourage was on their way to Connecticut to do the deal on a cold, rainy day — Cohen recalls being hotboxed in a car with the chain-smoking Chetrits for close to two hours, a situation he would find himself in regularly in the years ahead.
Need for speed
In that first deal, Cohen saw what scores of others in the industry would come to see as Chetrit’s trademark: the ability to move quickly.
The Chetrits would forgo the exhaustive due diligence you’d get from a BlackRock or Prudential and go by the “smell of the trade.” The family was also less leverage-reliant than others, often ponying up as much as 50 percent of the cash in the deal.
“They recognize the fact that they are not conventional buyers, so they’re not going to be able to make a deal with long-term due diligence or subject to financing,” Cohen said. “They will come to the table with cash and quick action, quick execution and quick closing. And that’s how they usually won against the more conventional investors.”
Though they have had plenty of troubled deals over the years, Cohen said the family is unlikely to lose buildings unless there is a strategic reason to do so. They usually like to work things out with the banks.
By the early aughts, Chetrit’s real estate appetite had grown to monumental proportions. In 2007 alone, he made nearly $2 billion in deals, unloading the Daily News building, at 450 West 33rd Street, and the old International Toy Center at 200 Fifth Avenue and 1107 Broadway, for a total of more than $1.4 billion, according to an analysis by TRD. And then buying, among others, the old Standard Oil Building at 26 Broadway for $225 million; a row of mixed-use buildings at 855-871 Sixth Avenue for $140 million; a former nursing home at 1760 Third Avenue for $80 million; the NYU buildings at 90 and 100 Trinity Place for $64 million; the 21-story office building at 989 Sixth Avenue for $49 million; the office building at 240 West 37th Street; six contiguous townhouses at 110-120 East 76th Street; and three properties on Metropolitan Avenue in Williamsburg.
The Chetrit family member described Chetrit’s talent thus: “He can walk into a building, weigh up the building visually, see it from the outside, have a vision of what he wants to do with it and in the middle of a tour of the building be like, ‘all right, guys, can we sit in this conference room two minutes? Here’s the offer. If you want, the deposit will be here in an hour.’ He’s just a really, really driven guy and he’s very nimble. I think that’s our competitive advantage.”
The Chetrit Group’s approach is guided by a belief Chetrit developed early on.
“In real estate,” the family member explained, “there’s a very interesting concept: it’s pretty much the same effort doing a 100,000 square-foot-building as it is a 1 million-square-foot building. The Delta of course is the dollars, but you still have to hire the architect. The scale is kind of what gets people’s attention, but it’s really just business strategy. Like if we have to meet with 10 different architects for 10 different projects, if we can achieve that same scale with two projects, it’s way, way more efficient.”
Art of the deal
Chetrit seems to revel in his work. He’s up early, often sending emails at 4:30 a.m. Those who know him say he’s an avid joke teller, and often uses them to disarm business associates or break the tension. But apart from collecting art and philanthropy, he has few hobbies — it’s the wheeling and dealing of the real estate business that gets his juices flowing.
Over the years, he has demonstrated a striking willingness to cash out of properties — even trophy ones that could be legacy-defining projects — when it suits him, and move on to the next deal. He likes to say he is “never married to the bricks.”
“He has the wherewithal and the wisdom to shift on a dime, to say, ‘you know, something, I see what’s going on — I see the market changing,’” said Doug Harmon, the Cushman & Wakefield broker who has represented Chetrit on multiple billion-dollar deals. “He’s never married to anything. He’s not emotionally married. He’s just super sharp. And he has a humble way about him.”
Chetrit bought the iconic Hotel Chelsea for more than $80 million in 2011, along with David Bistricer’s Clipper Equities. After dealing with constant battles with tenants of the property, the partners sold it to hotelier Ed Scheetz two years later. That same year, Chetrit and Bistricer made a $1.1 billion megadeal to buy the Sony Building at 550 Madison Avenue, announcing plans to convert the iconic Philip Johnson-design postmodern landmark into luxury condos. In 2016, however, the partners sold the building to Saudi conglomerate Olayan Group, for $1.4 billion; the Saudis decided to continue operating it as an office property.
Chetrit also spent years, along with Keith Rubenstein’s Somerset Partners, assembling the site for a megadevelopment along the South Bronx waterfront. The partners announced plans for a 1.3 million-square-foot, 1,200-apartment project, even attempting to rebrand the Mott Haven neighborhood as the “Piano District.” (That attempt flopped badly, with residents expressing outrage about a celebrity-studded party Rubenstein threw with a “Bronx Is Burning” theme).
The partners reportedly struggled to get the required $500 million financing for the project, and in 2018, decided to sell the dirt to Brookfield Properties for $165 million.
“He [Chetrit] is a deal junkie, just like all of these guys,” said Veronne, who was arranging the debt for the project.
With his business partners, Chetrit can be tough. He has popped up in the news over his tussles with bigwigs ranging from Michael Stern to Joseph Tabak and Gary Barnett.
None of his former partners or fellow developers agreed to speak on the record about Chetrit. But one developer who has had dealings with him over the years described him as “an intuitive real estate genius,” who “kind of licks his finger, puts it up in the wind and if he likes it, he’ll buy it.” Chetrit is also, he added, a stubborn negotiator who wields his deep pockets like a club.
“Sometimes, dealing with Joe is like dealing with the Twilight Zone,” the developer said. “The joke with Joe is if you’re 50-50 partners on a building, and the building is half empty, in Joe’s head, you own the empty part, and he owns the full part. He sees the world through his own filter. He will say ’the sky is pink with purple polka dots.’ And he’ll convince himself that that’s the way it is. And he can almost always economically lever you.”
“It’s almost like a Trump move where you start at such a wacky, irrational position,” the developer continued. “Like, I’m gonna sell you a bottle of water and I’m gonna ask $1,000 for the bottle of water. And then I’m immediately gonna go, ‘okay, not $1,000, how about $800? No? But I just gave you a $200 discount. What do you want?’ I think he loves the noise, the mess, the game. I think his endorphins get going when a partner starts barking and a lender starts barking. I think he gets excited.”
Legal filings shed further light on what it’s like to be in a dispute with Chetrit. In August 2012, Chetrit signed a joint venture agreement with Tabak’s Princeton Holdings, which had already made a deal with Michael Ring to acquire for $112 million his 50 percent stake in the Ring family’s portfolio of Manhattan office buildings — a near-mythical, 14-building bonanza in the heart of Midtown South, the center of Manhattan’s burgeoning creative and technology sector. But the Ring deal came with a big headache: Though Tabak had initially inked his deal with Michael Ring to buy his 50 percent stake in early 2011, Ring had gotten cold feet and attempted to terminate the contract just three months later. Tabak sued, and by the time Chetrit got involved, the two sides had settled in for a lengthy legal battle. Chetrit’s $12.5 million deposit on the Ring contract allowed Princeton to recoup its own initial $10 million deposit on the contract and take most of its financial skin out of the game. In exchange, Chetrit was in position for a chunk of the profits if the dispute were ever resolved.
By the time Chetrit got involved, 18 months after the initial deal, the portfolio’s value had already appreciated by $46 million. As a result, Chetrit had agreed to pay half of that appreciation, or $23 million. But a year later, in 2013, with the stalemate still dragging on, Tabak decided to change tack. He sold the Ring contract to Gary Barnett’s Extell Development for $65 million. Tabak gave Chetrit back his $12.5 million, plus about $8.5 million in profits. Princeton took $54 million — $8.5 milion, plus the $46 million the portfolio had appreciated between the time Tabak signed the deal and Chetrit joined him.
But Chetrit sued, claiming he was shortchanged.
“I am getting raped by you,” Chetrit wrote to Tabak on June 20, 2013. “I want to meet ASAP today.”
“The reason we are not closing [on the Ring contract] is not because of me but because of you,” Chetrit went on. “You decided to sell the deal, not me… Do you think I would put up millions and share the expenses for the privilege of giving you all or almost all of the profit?”
The battle dragged on for years in court, generating headlines. But it was eventually resolved and Chetrit and Tabak managed to maintain friendly relations. The Chetrit family member says Chetrit eventually directed that the multimillion-dollar settlement be directed to charities.
“It all went away and everything is fine and dandy,” Tabak told TRD in 2020. “I did well over $1 billion of business with Joe Chetrit. 450 West 33rd, we bought together, the Toy buildings, we bought together. We did very well, never had a fight. If I would have seen that [Ring portfolio dispute] coming, I never would have brought him in as a partner. If I would have known that part of what I need to underwrite in this deal is that brain damage that I went through for a bunch of years, I wouldn’t have done it.”
Speak no evil
Harmon attributes Chetrit’s reluctance to speak with the media to modesty.
“He’s got a humble way about him,” he said. “He’s old school in that respect.”
But Chetrit’s reluctance to engage with the press has not necessarily done him any favors. In an embarrassing incident in 2015, he was included in an $18 billion civil lawsuit by the Government of Kazakhstan, which accused him of helping two Kazakh men launder foreign money through U.S. real estate.
The alleged money launderers were ex-BTA Bank chairman Mukhtar Ablyazov and the former mayor of Kazakhstan’s largest city, Almaty, Viktor Khrapunov, whom the lawsuit alleged conspired with Chetrit to hide at least $40 million in a couple of projects. Chetrit denied ill-intent and eventually agreed to give an equity interest valued at as much as $75 million in the Flatotel, a Midtown Manhattan hotel that he was converting to condos. He also agreed to cooperate with Kazakh authorities and issued a joint statement with the city of Almaty and BTA Bank that a civil dispute“ has been amicably resolved.”
The Chetrit family member insisted Chetrit had no knowledge of the money laundering and that his reputation had been unfairly tarnished by the incident, and noted he had been indemnified by the court. None of Chetrit’s associates who spoke for this story believed he would knowingly engage in money laundering. Many emphasized his charitable giving, and his eagerness to offer help, financial or otherwise, to anyone who asks him for it. Still, the mystery surrounding Chetrit’s fortune has led to a variety of rumors that seemed plausible to them; while reporting this article, several said they had heard that some of his money comes from the King of Morocco. But none of them were sure whether it was true.
The Chetrit family member said the King of Morocco was not, and never has been, an investor.
“We have tremendous respect for His Highness and the entire royal family, but all of our equity in deals belongs to the Chetrit family,” the person said, adding that Chetrit’s humility is often misunderstood as secrecy.
He is “not hiding,” the person said. “You could find him — he goes to shul every day. He’s at work every day at the same office. He’s just not interested in becoming a public person. His joy is his private time with his family.”
