Real Estate Titans Split in Messy Divorce

Dynamic Developer Duo Haggle Over NY, Miami Properties

By Nathaniel Popper

Published July 03, 2007, issue of July 06, 2007.
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The relationship seemed so promising under the warm glow of the Caribbean sun.

Five years ago, Shaya Boymelgreen, an Orthodox real estate developer in Brooklyn, and Lev Leviev, the wealthiest man in Israel, seemed like a match made in heaven. After a Chabad-Lubavitch rabbi introduced them during a kosher cruise, the two created a joint real estate venture bearing their last names. Aided by an infusion of Leviev’s post-Soviet diamond wealth, the company known as Leviev Boymelgreen jumped out of the gate in a hurry, buying up prime property and beginning grand residential projects in New York and Miami and beyond.

Now, though, the flush of the Caribbean seems to have dissipated. In April, the contract that created Leviev Boymelgreen expired. The two are now engaged in an occasionally public and legally complicated divorce — one focused primarily on how to split the children of their big dreams.

“The only possibility now would be to divide many of them,” Donna Kreisler, Boymelgreen’s personal assistant, told the Forward about the properties that Leviev Boymelgreen began developing. “We’re basically sitting at the table and trying to find the best solution for both sides, but that’s taking time.”

Together, Boymelgreen and Leviev had a hand in developing the two most Jewish cities in America — New York and Miami — and there are indications that the developers will end up with one apiece.

“I believe in Miami,” Boymelgreen sniped to the Miami Herald in April. “Maybe he doesn’t believe in Miami because he is so far away.”

“If Mr. Boymelgreen is managing his business through the newspapers, it’s his own prerogative,” Rotem Rosen, the American CEO of Leviev’s company, Africa Israel, told the Forward. Led by Rosen, Africa Israel has made a big show of its new independence in New York, buying up the New York Times building for $525 million in April. A few weeks later, Africa Israel paid a reported $200 million for the famous Clock Tower building on Madison Avenue.

These moves indicate what has long been suggested about the partnership between Leviev and Boymelgreen: that Boymelgreen was just a way into the American market for an Israeli billionaire who increasingly has used his fortune from the Russian diamond market to begin buying up the world.

“The creativity behind what Africa Israel did in the U.S. in the last few years — it’s only thanks to one person. It’s the entrepreneurship of Mr. Leviev and his ideas,” Rosen said.

Internationally, Africa Israel has been expanding everywhere from Romania to Buenos Aires, where the company is importing the American strategy of turning office spaces into high-end residential real estate.

Boymelgreen, on the other hand, has shown a slight limp since the relationship broke up. He purchased an Israeli investment company, but so far this has been primarily in the news for legal problems. In April, Leviev’s financial filings reflected that Boymelgreen owed him some $142 million. Boymelgreen has remained visible with residential projects in Brooklyn, but those buildings have gone up slowly. Last week the real estate blog Curbed took note of the glacial pace of building at an apartment complex in downtown Brooklyn.

“I think the breakup has caused some financial concerns, and that kind of played into the speed of some of the developments,” said Robert Guskind, a blogger at both Curbed and Gowanus Lounge, two sites that follow the Brooklyn real estate market.

Despite what has become of the relationship, there were good reasons to think that Leviev and Boymelgreen could make it together. Both are religious men active in the Chabad Lubavitch movement — Chabad sources say their initial introduction was made by Moshe Kotlarsky, one of Chabad’s top-ranking rabbis — and both have made their mark by pursuing non-Jewish projects in some of the most Jewish cities around the world.

Leviev grew up in Uzbekistan with a father who helped bring Judaism into the secular Soviet Union through the underground channels of the Chabad Lubavitch movement. After moving to Israel as a teenager, Leviev opened a diamond-polishing plant that he used to win contracts to mines in Russia and Angola. He has since leveraged that money and become the main Jewish philanthropist in Russia, funding the Chabad-run Federation of Jewish Communities. Both the federation and Leviev are said to be close with President Vladimir Putin.

Boymelgreen grew up in Israel and moved to the United States to continue his religious studies. He started Eichler’s, the largest Judaica store in the world, and has since branched out into real estate, particularly in Brooklyn. He has set himself apart by spotting up-and-coming areas for development. The latest is the sewage-steeped Gowanus Canal area.

“He always seems to be in there many years ahead of the curve,” Guskind said.

Despite his knowing take on the secular world, Boymelgreen has kept his feet firmly planted in the Orthodox world. He sports a beard and has houses in Israel and in the Chabad-heavy Brooklyn neighborhood of Crown Heights, according to people in the community.

Now, as the divorce has proceeded, both sides have been quiet about what went wrong and what they plan to do with all their holdings. And the little that has been said seems already in dispute.

In an interview, Kreisler said her boss and Leviev are still looking to do some work together and are currently building two developments in suburban Tel Aviv.

Rosen categorically denied this. “Whatever we have obligations to finish together, we are finishing together,” he said. “Wherever we have no obligations to finish together, we will not finish together.”

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