Leslie Himmel: The $500 Million Woman
Al Barbarino July 9, 2013, 10 a.m.
Leslie Himmel started Himmel+Meringoff Properties from the ground up with business partner Steve Meringoff in 1985. “Just believe in yourself and buy real estate,” were the words of wisdom with which Ms. Himmel’s mentor, former REBNY chairman Bernard Mendik, inspired her at the time. “It’s easy to say but not always so easy to do,” she said. It may not have been easy, but she took up the challenge, and by all accounts the Harvard Graduate School of Business alumna has certainly done it. Three decades later, Himmel+Meringoff has grown to 45 employees and Ms. Himmel is one of New York’s most active owners, having accumulated a portfolio of commercial real estate holdings valued in excess of $500 million. She has acquired and financed over 45 commercial properties in transactions worth more than $1.5 billion. Yes, she’s also a woman, but gender is irrelevant, she told The Commercial Observer last week, when she shared her thoughts on her success, the industry at large, her rock-solid partnership with Mr. Meringoff and maintaining a healthy work/life balance. Here’s what she had to say.
Ms. Himmel: It was really a huge honor when I received the Mendik award [The Bernard H. Mendik Lifetime Leadership in Real Estate Award] a few years ago for REBNY. Bernie was one of my mentors even before I went into partnership with Steve Meringoff. When I was in my mid-20s, I didn’t have the money to go to REBNY, and I snuck in for my first time there. I remember looking at the people on stage, and I said, ‘God, I would love to one day be up on that stage.’ Never did I think that I actually would be. It was just a dream and a star to reach for. It was such a great feeling [once it happened].
In what capacity was Mr. Mendik a mentor?
I met him when I was still at Integrated Resources, when I wanted to start my own firm, and he gave me career guidance as to how to be out on my own. I remember Bernie saying to me, ‘Forget working for anybody else. Just believe in yourself and buy real estate.’ And it’s easy to say but not always so easy to do. But he was really inspiring with that, and I actually took up his advice and became really entrepreneurial. I met up with Steve Meringoff and we became partners, and we’ve been buying real estate ever since 1985.
What’s it like working with Mr. Meringoff after nearly three decades?
I am just so grateful to have Steve Meringoff as my partner. We have an unbelievably synergistic relationship. He’s truly brilliant, and through good times and bad we’ve been a really terrific team, and I feel so fortunate to have that.
Are you tired of people asking about being a woman in real estate?
Totally sick of it. I love the business. To me, my work is fun and it doesn’t feel like work. People ask me frequently why there are not more women in the business—and I think I’m known to be the largest woman landlord in terms of ownership, and at least creating it on our own. But I don’t think it has anything to do with gender. I was very entrepreneurial at an early age, and I really liked math and law. And I was drawn to real estate partly because I like owning something, so I actually don’t understand why there are not more women in the business. It’s so entrepreneurial, and you can create unlimited opportunities. When I’m on the executive committee at REBNY, there’s very few women, and I go to meetings and it doesn’t faze me. I’m so used to it.
It’s so irrelevant. The question I don’t mind, though, because I like to help young women, is how did you work so hard and have a family? It was challenging when the kids were young. So when young women say to me, ‘How’d you do it?’ First of all, I just did it. I don’t know. I just did it. What I found was that having kids at home and having a wonderful fun time with them—granted, it was always a lot of work—I always had somewhere to be happy, because if work was really difficult, I could also focus on what was good at home. And when the kids would get a little bit difficult, I could focus on [work].
You’re on the executive committee at REBNY and part of the Economic Development Committee. What are some issues you’re tackling?
The members of the committee come from a diverse set of backgrounds. We work on various economic issues, and we meet directly with members of the city government. The focus is to try to continue to have economic incentives and keep Manhattan the greatest city in the world. It includes changes with economic incentives, changes with zoning, trying to keep the ICIP (Industrial and Commercial Incentive Program), which is a great tax abatement, trying to keep real estate taxes [under control], and trying to have more transparency with the real estate tax income and expense forms.
When you spoke with The Commercial Observer in 2010, you were in the midst of a buying spree. What’s your current strategy?
We continue to look to buy properties, but it’s been more of a seller’s market in the last year, and cap rates got so low—this year maybe 4 percent, maybe 3 percent, maybe even zero percent in cases. But we are really focusing on refinancing all the properties that we can, trying to take advantage of historically low interest rates. We just successfully completed a refinancing of 729 Seventh [Avenue], at an interest rate of 3.5 percent, which is historically low for a commercial office building. We can create equity in our own buildings through this interest rate environment.
Prices are extremely high right now. How long will it last?
Cap rates are largely a function of interest rates, and with interest rates being so low, cap rates followed, so we believe that, as the government stops buying $85 billion worth of bonds per month, that rates will start to go up, and therefore cap rates will start to go up. You saw that movement even in the last month, where the 10-year [Treasury note] dramatically increased. And even rates today versus a month ago, for that same loan I did at 3.5 [percent] rate, would be at 3.9 percent. So in time, we do believe that cap rates will move in tandem to interest rates—and interest rates have to go up. They’ve been kept artificially low by the government.
You focus on Manhattan. Are there still emerging neighborhoods?
The weakness of Midtown, if you look at Sixth Avenue vacancies, is fascinating. We have a number of properties on Park Avenue South, and that’s become such a hot market. Even our Chelsea properties are easier to lease than Midtown. I wonder if in time Midtown will come back, but right now, you have a huge amount of industry trends [with] a number of the media companies and the tech companies, and most of our buildings south of 42nd Street are like 100 percent filled.
What’s your most memorable deal?
531 West 57th Street was a property that we bought in 2003, and what was fascinating about that acquisition was that we were purchasing two interconnected condo interests. It was fun. Because it was complex, you needed to act quickly and you needed to act with all cash.
There was a legal entanglement of a tenant in bankruptcy. We had to change the tax laws, because we were purchasing a 10-story building and the top four floors were occupied by International Flavors and Fragrance. They had sold their building to Townsend and Company, who wanted to sell us just the bottom six floors, which was like an operating position. The ISF lease was a 25-year lease with lots of options. There had been a right of first refusal by one of the tenants and a right of first offer with the other interests.
It was really complicated, off-market, and they needed an all-cash transaction. We went in, assessed it, negotiated the deal and closed really quickly. We repositioned the property from that point; we upgraded it, and now it’s great. We have Labcorp as one of the tenants there, CBS, and the pre-eminent multiple sclerosis doctor in the world, Dr. Saud Sadiq, and his lab.
Do you prefer complex to simple?
In Manhattan, you have so much money chasing too few goods. I think one of our competitive advantages is the ability to help meet a seller’s circumstances in a complex deal—although, it’s fun once in a while to do one that’s simpler.
At the Observer Media Group’s Power 100 party this year, you sponsored a whiskey table. Are you a whiskey fan?
We actually worked with [Observer Media Group] to come up with that idea. We wanted to do something different and fun that would add a “wow” factor, and we actually got such great feedback, as it was really different.
You have two kids?
I have two wonderful kids. Well, they aren’t kids anymore: Andrea, who is turning 27, went to Wharton School for undergrad, and she’s working as an energy analyst at Sanders Capital, and my son, David, who’s 25, is now at Harvard Business School. That’s kind of exciting, to see the school so many years later through his eyes. He’s working with a private equity firm for the summer.
What else do you do outside of real estate?
I love sports. I play tennis. I bike; I have a racing bike. I do yoga. So sports are kind of my way of decompressing. I have a lot of friends, so I love spending time with them. And in New York, I take advantage of the cultural opportunities and go to museums and theater and movies a lot.
You live in Manhattan—do you ever get sick of the city?
I love New York, but I think it’s important to leave once in a while to appreciate it, because I find that when I am in New York, my pace gets faster and faster. I love it, and I can’t get enough of my business and social life there, but I think it’s important to take time away to recharge our batteries.