Meet Yellowstone’s Issac Hera, Who Has Quietly Racked Up Turnaround Deals in New York

But, to a large extent, the firm hasn’t advertised itself.

Established in 2020, Yellowstone is a private equity firm focused on opportunistic and value-add real estate transactions in the U.S. Although it has not completed a large number of deals, Yellowstone has made a serious and strategic mark on New York City. 

The Manhattan-based firm is a joint venture between international, institutional and private investors. The investors have approximately $200 billion in combined assets under management, according to the CEO.

“We have the capabilities of investing hundreds of millions of dollars out of our own balance sheet, which, together with our credit line, enable us to close on deals very quickly without a need to bring partners or rely on financing,” Hera said over email.

Most recently, in March, BHI increased Yellowstone’s capital call line facility to $150 million from $90 million to provide capital for future opportunistic acquisitions. Yellowstone deployed the $90 million line of credit, obtained in June 2023, to pick up the New Yorker Hotel’s $106 million note from M&T Bank (MTB) a few months later. Yellowstone repaid the $90 million credit facility, leaving the full $150 million line available, Hera said.

“The track record of Yellowstone’s ownership and leadership to acquire, manage and improve a premier cross section of real estate assets is unparalleled,” Gil Karni, CEO at BHI, previously said in a statement. BHI is the U.S division of Israel’s Bank Hapoalim.

But who is Yellowstone?

It launched during the pandemic when there was a flight to safety among investors. Hera said he decided to sell his old firm and launch Yellowstone with “a new opportunistic strategy” that could take advantage of future pandemic-related opportunities. The firm came out swinging due to its strong capital relationships with their investors; its ability to do what they say they would and act expeditiously; and a willingness to accept calculated risks other investors might not accept at the time. That’s according to Eastdil Secured’s Scott Ellman, who sold Yellowstone a couple of deals.

Hera declined to provide information about Yellowstone’s team besides the following description: “We have a small team of very talented people; all are working hard and focused on creating value.” Per the firm’s LinkedIn page, it employs between two and 10 employees. Its headquarters is at 1325 Avenue of the Americas between West 53rd and West 54th streets.

Yellowstone likes focusing on troubled properties because it views “problems as challenges and opportunities waiting to be seized,” Hera said.

Prior to establishing Yellowstone, Hera was CEO of residential real estate company Star Real Estate Ventures, whose portfolio was acquired by Morgan Properties and Olayan America Group. Star Real Estate Ventures was a vertically integrated multifamily platform with a portfolio of 15,000 apartments in 11 states, valued at $1.75 billion. Before Star Real Estate, Hera was CEO of Brack Capital Real Estate USA, the U.S. subsidiary of international real estate development firm Brack Capital, and he worked in Israel for two tax advisory firms, PwC and KPMG.

It was while at Brack 20 years ago that Hera met luxury residential broker Shlomi Reuveni. At the time, Reuveni worked at the Corcoran Group. Brack was developing three residential condominium buildings — Element at 555 West 59th Street, The Olcott at 27 West 72nd Street, and 15 Union Square West — and tapped Reuveni for his marketing, design, branding and sales services.

What struck Reuveni was Hera’s “incredible mindful analysis.” 

“He really understands future value potential and added value,” said Reuveni, now CEO and president of Reuveni Development Marketing, part of Christie’s International Real Estate Group. “Overall, he’s just very smart, very sound about market conditions.”

Brack erected the full-service Element condo on the site of a 250,000-square-foot assemblage, Reuveni said. To do that required “tremendous vision,” as “the whole stretch of what’s now called Riverside Boulevard was then just parking garages, industrial buildings and gas stations.”

The condo was completed in 2007. “They very strongly understood the potential location being between the Upper West Side and Midtown West,” according to the broker.

For The Olcott, Brack converted an old single-room occupancy building into a luxury condo, the broker said. And at 15 Union Square West, which was the old Tiffany & Co. headquarters, Brack took a nondescript white brick building and “created an incredible project that went against the grain in terms of the unit mix that was established there at the time,” Reuveni
said.

New developments typically offered studios and one- and two-bedrooms. Brack opted to build larger, more expensive units, the broker said. The building reopened in 2008.

The New Yorker Hotel
The Unification Church, founded by the late Korean religious leader Sun Myung Moon, has owned the New Yorker Hotel, with its famed red sign, since 1976.

Built in 1930 and located at 481 Eighth Avenue between West 34th and West 35th streets, the 1.1 million-square-foot, 42-story building features 1,000 rooms, 140,000 square feet of student housing, 110,000 square feet of office space and 16,000 square feet of multilevel retail space. In 2014, it was rebranded as a Wyndham.

Lender M&T Bank put the asset’s $106 million performing loan on the market in July 2023. The senior mortgage had a loan-to-value ratio of 43 percent backed by the building. M&T decided to part with the debt in part because of the regulatory capital treatment associated with hotel loans, as Commercial Observer reported. That didn’t faze Hera, whose firm bought the note on the building using its credit line.

“We possess the investment power of [an] institutional investor combined with [the] nimbleness of [a] local real estate operator,” Hera said. “We operate without the regulatory constraints that banks or institutional investors are faced with, nor the liquidity constraints encountered by local operators.” 

 220 West 42nd Street
Two years ago, Yellowstone acquired 220 West 42nd Street, a 440,000-square-foot office property in Times Square, from U.K.-based investment firm Epic in a $161 million deed in lieu of foreclosure, PincusCo reported. 

Hera said Yellowstone liked the building because it “boasts a distinctive architectural design in the vibrant Times Square area. Its central location and flexible zoning permit various business plans to adapt to market conditions, whether as an office, hotel or residential space.”

The retail space in 220 West 42nd Street used to be home to “one of McDonald’s highest-grossing stores,” per Hera, and “will soon feature an innovative concept we’re developing with a European retailer.”

He added, “This asset offers significant upside potential with protected downside risk.” 

Maxwell Hotel
The firm bought a $170 million note from LoanCore Capital collateralized by the 697-unit Maxwell Hotel building at 541 Lexington Avenue in 2022. The 14-story property was previously branded as a W Hotel.

“There is the potential to convert the building into upscale residential use or alternatively to tear it down and construct a brand-new office building, capitalizing on special Midtown district zoning rules,” Hera said.

The Watson Hotel
Yellowstone obtained the 597-key Watson Hotel at 440 West 57th Street near Columbus Circle for $175 million in 2021 because of its “operational flexibility,” Hera said.

“It was in a complex situation with the building divided into fee simple and ground lease ownership, both burdened by defaulted loans,” Hera said of when Yellowstone acquired the Watson. “We strategically purchased the ground lease note, negotiated with the ground leaseholder to return the property, acquired the land, resolved the loan default and streamlined the ground lease structure.”

There were a lot of lawyers and advisers on the Watson deal and different positions on the same property that needed to be consolidated and purchased, said Ellman, who represented the land owner and the leasehold lender in the transaction.

Hera “was able to work through those complexities to streamline and consolidate all of the interests in the transaction, creating value for his investors and ultimately the sellers,” Ellman said.

Reuveni has been assisting Yellowstone for the last year and a half conceiving the next iteration of the building. One option is residential. If that goes through, Reuveni promises it will be “a project like no other” in terms of its location, design and amenity package.

Peter Olsen, partner in the real estate department at law firm Paul Hastings, said he represented Yellowstone in buying the ground lease position to “effectively own the hotel.”

Olsen has worked with Hera for 20 years, the attorney said, and called out Hera’s “tremendous integrity.”