TODAY'S PAPER
72° Good Afternoon
72° Good Afternoon
BusinessTechnology

Real estate dynasty's new chapter

Publicly, there has been no sign of anything amiss among

the Rechlers, Long Island's first family of real estate.

But some noticed the oblique reference deep in one of the dozens of

documents filed with the Securities and Exchange Commission since the

acquisition of Reckson Associates Realty Corp. by SL Green Realty Corp. of

Manhattan was announced in August:

Reckson, it said, had later "received a request by certain former members

of management" for access to bidding materials and had rebuffed it.

Now the family acknowledges those former managers were chairman Scott

Rechler's brother Gregg, 40, cousin Mitchell, 46, and uncle Donald, all of the

family firm Rechler Equity Partners, who were considering a bid for the same

suburban portfolio that Scott had just agreed to buy from SL Green as part of

the deal for $2.1 billion.

This fall, even as the Reckson-SL Green transaction was being repeatedly

delayed by rival bids from corporate raider Carl Icahn and dogged by

accusations of a sweetheart deal, Scott Rechler was privately embroiled in a

tense confrontation with his own kin about the deal, one that has ended with a

corporate family schism.

Here's why: At the heart of the portfolio Scott, 39, is buying are a few of

what might be considered the Rechler family jewels, the portfolio of premium

Long Island office buildings developed by a family business spanning three

generations, buildings such as the Omni Building and Nassau West Corporate

Center in Uniondale, the second of which Rechler plans to sell to pay for his

deal.

"Some of those buildings my brother and I built over 25 years ago and had

in the family business for that long," said Donald Rechler, 72, who grew up

with the company started by his father, William, and formed Reckson Associates

in 1968 with his father and brother Roger, 64, Scott's father. Reckson

Associates, now changing hands for about $6 billion, was worth about $300

million when it went public in 1995.

"My father told me never to fall in love with a building," Donald Rechler

said last week, "but you can't help it."

At issue is whether Scott Rechler's private-equity venture was an open

breach of a 2003 family agreement that any Rechler doing office or industrial

business on Long Island had to do it through the family's private company,

Rechler Equity Partners.

But Scott Rechler said he was under no such constraint and chalked up the

conflict to family dynamics. "People who are type-A personalities, who have big

visions and big goals, when you put them all together there is almost always

going to be some level of drama," he said.

Mere jealousy of Scott's success, as some contend? The family's Rechler

Equity, worth an estimated $500 million, was formed in 2003 to resolve the

internal tensions that led to the departure of Gregg, Mitchell, Roger and later

Donald from Reckson Associates, and the liquidation of most of their stock.

There are at least two sides to that story, too, which include shareholder

unhappiness over the number of family members in Reckson's upper management,

and dismay over Scott Rechler's ill-starred detour of Reckson funds and

management energy into a failed dot-com venture. That venture was run by Jon

Halpern, the Marathon Real Estate executive with whom he is now teaming to buy

the suburban portfolio. Reckson's stock has doubled since the family's

departure.

Under the parting of ways announced last week, Scott Rechler agreed to give

up the use of both Reckson and the family name and sever business ties with

Rechler Equity.

On Friday, Donald Rechler made clear that Rechler Equity, which until now

has dealt exclusively in the family's industrial portfolio of 6 million square

feet of space on Long Island, also intends to compete head to head with Scott

Rechler in office development, with the expiration of a three-year noncompete

agreement signed when Rechler Equity was formed.

Donald Rechler said it was important for his nephew to relinquish the

business use of the family name "for clarification," because the business

community has too often mixed up Scott's dealings with those of his cousin and

brother.

"If your sister won the bowling championship and they kept saying you won

the bowling championship, or your sister was getting a divorce and they said

you were getting a divorce, you wouldn't like it too much," he said.

But the step also seems intended to make clear to all observers who the

real bearers of the Rechler family legacy are. "We're the family. ... We're not

having a ceremony and pulling his buttons off or anything; he is family, but

he isn't representing us in a business sense," Donald Rechler said.

The Rechler family likes to keep a smooth facade, but it has had splits

before. The We'Re Group, a Jericho-based development company, was formed a

half-century ago when William Rechler parted ways with his brother Morton and

brother-in-law Jack Wexler.

Scott Rechler, whose complex negotiations for the redevelopment of the

Nassau hub depend largely on the trust vested in him as a seasoned scion of the

Rechler dynasty, dismisses the idea that with the latest agreement he's given

up his rights to the family legacy. He adds that Gregg and Mitchell have their

own private venture, R Squared, that eschews business use of Rechler or Reckson

under the same agreement that binds him.

"What's the legacy? It's not a name, it's what you do," he said. "This is

what I do because to me the legacy is the values, making your community a

better place to live and work. "

And however loudly money may talk, blood is still thicker than water. Even

as negotiations with his brother Gregg bogged down, Scott attended his niece's

bat mitzvah last month.

That's why their father Roger, who has stayed neutral, prefers to describe

the conflict as simply a "division of real estate."

"I'd hate to see you paint this as a family quarrel," he said. "It's not a

family quarrel, it's getting things straightened out, believe me."

Treasures of two empires

Reckson Associates Realty 10 largest properties, by square feet, before share-

holders voted Thursday to sell to SL Green of Manhattan. Long Island properties

will revert to private ownership by investors led by Scott Rechler.

One Court Square, Long Island City 1,401,630

919 Third Ave., Manhattan 1,400,000

1185 Sixth Ave., Manhattan 1,088,690

Reckson Plaza, Uniondale 1,060,000

810 Seventh Ave., Manhattan 695,000

1350 Sixth Ave., Manhattan 555,000

333 Earle Ovington Blvd., Uniondale 550,000

Giralda Farms, Chatham/Madison, N.J. 500,000

120 W. 45th St., Manhattan 445,000

360 Hamilton Ave., White Plains 384,000

Rechler Equity Partners

10 largest properties in square feet by one of the Island�s largest investors

and owners of commercial real estate, with assets exceeding six million square

feet

19 Nicholas Dr., Yaphank 230,000

2002 Orville Dr., Bohemia 206,005

100 Andrews Rd., Hicksville 167,754

1516 Motor Pkwy., Hauppauge 140,000

2005 Orville Dr., Bohemia 130,010

2004 Orville Dr., Bohemia 106,515

70 Maxess Rd., Melville 78,600

2001 Orville Dr., Bohemia 72,000

360 Motor Pkway., Hauppauge 60,000

100 Engineers Rd., Hauppauge 40,880

MONDAY FOCUS

Reckson Associates Realty Corp. was founded in 1968 by William, Donald and

Roger Rechler to manage industrial and office properties. In September 2003,

the company split - industrial properties to Rechler Equity Partners, office

properties stayed with Reckson, which went on to establish itself as the

dominant landlord of upscale office space on Long Island in 2005 by buying the

EAB Plaza in Uniondale for $240 million. The 15-story glass towers include 1.1

million square feet of space.

More news