Rabbi-led Real Estate Firm Builds a City Empire

New Haven’s busiest real-estate developers looked out from a downtown rooftop onto a city they’re remaking at breakneck speed, from subsidized housing to penthouse duplexes, with a fresh $20 million infusion. No wonder “Pike International” signs have become practically as visible as stop signs.

And the logo adorns Pike’s latest showpiece, an about-to-open remodeling of the upper floors of 140 Orange St., across from Pitkin Plaza. By the end of the month tenants will begin moving into new luxury apartments above Mediterranea restaurant, with rooftop lots overlooking Pitkin Plaza at one end and New Haven’s eastward skyline on the other. Before that work is even completed, Pike has started making plans for a sprawling Chapel Street building directly below, including an envisioned rooftop restaurant spilling out onto Federal Plaza.

In all, Pike International‘s post-market-collapse buying and remodeling spree has put it in control of 1,000 apartments across town. And counting. More than many government agencies or long-established barons of New Haven real estate, Pike is increasingly determining where New Haven sleeps, eats, and works.

Mayor John DeStefano, for one, has been noticing all those Pike logos. He likes what he sees. He likes that his government doesn’t encounter trouble with Pike, that problem properties are getting new life, that the company’s boss lives in town instead of New York or California,

“He [Shmully Hecht] lives here,” DeStefano said. “He’s involved in the community. He does a good job with his properties. They’re clean. He does lease enforcement. He thinks strategically about his properties. It’s a good story for the neighborhoods he’s been in.”

Plus, DeStefano noted, “he’s done a lot for the awning business.”

Hecht and company are doing that because they’re making an eight-figure bet that, amid the ashes of a recession and real-estate bust, New Haven real estate presents a remarkable investment opportunity.

Pike’s crew is buying distressed properties out of foreclosures, at auctions, or just from out-of-town investors who are giving up and walking away. They’re plowing money into the properties rather than tearing them down; they make use of preservation tax credits. In some cases, especially downtown, they’re upscaling the apartments for high-end Yale-affiliated renters, in other cases maintaining lower-income and middle-class renters whom they closely check up on before signing leases.

“A lot of people didn’t do a good job in the boom. We’re cleaning up the mess,” Hecht  said in an interview.

Hecht has brought on new partners to help steer the growing enterprise. Argentinian-born Fernando Pastor is his “master planner” for new projects as well as head of a new division offering design advice to other property owners. Jeanne Consiglio (niece of Sal and Flo Consiglio of Sally’s Apizza fame) is running a new brokerage arm marketing properties (like the Whalley and Winthrop lot) for other owners. Meanwhile, Carol Lopez-Smith has, over four years, built up the leasing side of the business, personally visiting the homes of Section 8 applicants before deciding whether to rent to them. Hecht and Pastor met through a mutual friend after they both bid, unsuccessfully, on a city sale of the old Lovell School in East Rock.

Hecht’s role includes scaring up the dough to fuel Pike’s buying spree and give steady work to its 50-odd direct employees and some 100 employees of five teams of contractors.

“Money’s coming from Canada. Money’s coming from Tel Aviv. Money’s coming from New York City. Money’s coming from Florida. Money’s coming from all different types of families and institutions that believe in the future of New Haven thanks to the work of the mayor and [Yale Vice-President] Bruce Alexander,” Hecht said.

How much money? “Tens of millions of dollars,” Hecht said. Asked for specifics, he said the total has topped $20 million since the recession hit.

How many apartments? Pike now owns about 1,000 in town, with more to come, he said.

Pike is privately held. Hecht structures separate syndication deals for each property or cluster of properties, each under the name of a different limited liability corporation. So hard numbers are hard to come by; the ubiquity of the Pike signs and all that construction are the more visible evidence of an empire in formation.

Other investors hail from Fairfield County and from California and South Carolina, Hecht said. He called the investors “generally high net worth families looking for long-term growth and stable investments, not the speculative type that took this country down. Also hedge funds and private equity firms.”

Hecht, who’s 36 years old, has made this bet before. A rabbi, he came to town in 1996 to build an independent Yale-affiliated social and educational society, first called the Chai Society, since renamed Eliezer. It has become almost like a version of Skull & Bones, hosting visits by world leaders at its Crown Street townhouse. Hecht continues to serve as the group’s spiritual adviser while separately commanding the Pike ship.

That society purchased a Crown Street brownstone with the financial help of an Israeli-born businessman Hecht had gotten to know in New York’s diamond district. Hecht noticed that the purchase seemed like a smart real-estate deal. Yale was investing more in New Haven at the time. He noticed that Crown Street and other areas were rising in value—even though a recession had hit New Haven. He noticed properties selling for cheap all over town. New Haven was a “penny stock,” he decided.

So in addition to building up Chai/Eliezer, in 2000 he formed the real estate company that would become Pike, and tapped a growing network of worldwide investors. He bought trashed abandoned condos in Fair Haven Heights. He bought apartment buildings in the Elm-Lynwood Place corridor to market to Yalies, among others. he bought apartments on Frontage Road—across from where Yale-New Haven embarked on building a new cancer hospital. He bought an apartment complex on Elm Street in the Edgewood neighborhood. He looked for stately East Rock homes to rebuild. He bought all over town, developing his portfolio as prices remained low, then upped the value of those properties.

Pike also bought around 1,000 units in Hartford and Waterbury, according to Hecht. The market in those two cities wasn’t improving so Pike started selling off its stock there in 2005. It’s looking to reinvest there again now that prices have hit bottom.

But Pike never lost faith in New Haven. It kept building up its portfolio. When the market collapsed again in 2007 and 2008, Pike had the wherewithal and investors to swoop in again and advance to the next stage.

Its challenges now aren’t where to find the properties or the workers or even, it seems, the tenants. The challenges including managing growth without sacrificing quality; and navigating the line between raising property values and attracting wealthy tenants. The company needs to avoid overheating the market or pricing out the many lower-income and middle-class renters in what’s still a poor city.

One tenant, at Quinnipiac Gardens, complained that Pike has raised her rent but hasn’t improved the place. Hecht said Pastor is drawing up the plans for a “total overhaul” of the complex a la Ethan Gardens. He said rents rose because of heating cost hikes and tax hikes.

The key to success will lie in remaining “local,” which means New Haven and the surrounding region, Hecht said. He cited a remark one of his “great mentors,” New York builder Kamran Elghanian of TF Cornerstone, once told him: “Real estate is a local business.”

“Pike International is poised to lead the real estate industry in Connecticut over the next three to five years,” Hecht predicted. “You won’t see us buying in Florida or Vegas any time soon.”

Another part of Pike’s strategy involves close attention to the renters it takes on. Lopez-Smith cited her visits to Section 8 applicants’ current residences. “We want to see how they keep their homes. If it’s in good shape, we take them.” But not if a property is “trashed.”

“It’s important to know the tenants personally,” said Lopez-Smith, who has a seemingly photographic memory for the number of apartments and the life stations of the renters at Pike’s properties.

Lt. Ray Hassett, the top cop in the Dwight/Kensington neighborhood, has noticed the effort Pike puts in to screening. He’s also noticed how promptly Pike’s staff responds to police concerns about problem tenants. “They’re always there for us,” Hassett said. “They’ve got a tight operation. I have only good things to say about them.”

Mayor DeStefano observed that Pike “thinks strategically” by identifying clusters of properties to purchase and fix up, thereby increasing the probabilities of success at each location. “It’s more than buying here and buying there,” he said, but rather creating “corridors that strengthen neighborhoods.”