Jungreis was in his office; Herzka vacationing on a cruise ship. Yet, the mortgage broker was calling “every hour” to make sure a particular deal closed.
“I look up to him because he never stops,” said Jungreis – a telling statement from a broker known for his own punishing work schedule. “Even I stop once in a while.”
For more than two decades, Herzka has propelled Meridian from strength to strength, most recently through the launch of an investment sales division.
The firm has more than 250 employees in its New York City headquarters and offices in six states. Meridian says it brokered roughly $30 billion worth of loans in 4,000 transactions. Competitors estimate the firm has a whopping 15 percent market share in New York, and insiders say Herzka’s next big step could be to take the company public.
Suitably, stories from Herzka’s clients, brokers and peers paint the portrait of a man for whom work is paramount. If Herzka attends an industry or charity event, he is more likely spotted on the way out the door than schmoozing inside, sources said.
“When you love what you do, it doesn’t feel like hard work,” Herzka told The Real Deal.
The making of a success
Herzka, 53, grew up in Brooklyn’s Borough Park neighborhood and still lives in the borough. In the 1980s, he was a principal at Gelt Funding, now Allen Gross’ GFI Capital Resources Group. At the time, Gelt was a divisive mortgage brokerage that was sued by First Nationwide Bank, which claimed Gelt misrepresented property values to secure non-recourse loans; the suit was later dismissed. Herzka and other Gelt executives left to form Meridian in 1991, while the market was still wobbling after the 1987 stock market crash.
In the thick of the 2008 downturn, Meridian and partners launched a firm called Ladder Capital Finance to provide $1 billion in debt and equity for the commercial market and, in partnership with Sovereign Bank, spun off a specialized underwriting team to create Fannie Mae-approved lender Beech Street Capital. The latter was sold to Capital One in 2013.
At Meridian, Herzka’s partners – Aaron Birnbaum, Avi Weinstock and Jeff Weinberg – oversee the commercial platform, manage multifamily mortgage advisers and facilitate multifamily lending deals. Meanwhile, Herzka remains the firm’s alpha broker.
Based on dollar volume, the firm is in a league with heavyweights Eastdil Secured and Howard Michaels’ the Carlton Group. Eastdil was New York City’s top large-loan brokerage in 2013, with $7.98 billion in deals that exceeded $100 million in debt, according to a ranking by TRD last year. Meridian came in second, with $5.47 billion in deals, followed by Carlton.
“Everyone, including our firm, runs into the Meridian people or Ralph at some point, simply because of their sheer size and style of marketing,” said Simon Ziff, president of Ackman-Ziff Real Estate, a competitor.
Herzka “takes on deals another shop wouldn’t take a stab at, like a land lease with 20 years left on it,” said Daniel Levy, a partner at Ashkenazy Acquisition.
In the past year, Meridian upped its large-loan game. It arranged $737 million in financing for Brookfield Property Partners’ Putnam portfolio acquisition and $700 million in financing, along with Eastdil, for David Werner’s purchase of the Mobil building’s leasehold. It also sourced a $785 million loan for Scott Rechler’s $1.2 billion acquisition of the Helmsley Building, a trophy office property at 230 Park Avenue.
“Ralph is moving upstream and is leaving a lot of smaller business open for his competition,” said a high-level source at a competing mortgage brokerage. “You can’t do $120 million in business a day, which is his motto, and also do $2 million deals.”
Meridian’s biggest clients tend to be large local players, including Joseph Chetrit’s the Chetrit Group, Joel Wiener’s the Pinnacle Group and Jared Kushner’s Kushner Cos.
These same players back Herzka in his personal life. In August, he is doing a 180-mile charity bike ride to support Camp Simcha, a camp in Sullivan County for seriously ill children. His fundraising goal was $10,000, according to his rider profile, but thanks to large donations from the likes of Chetrit, Kushner and Wiener, he’s already raked in nearly $150,000 this year, more than any other participant.
David Schechtman, who left Eastern Consolidated in April to help kick off Meridian’s investment sales division, recalls dining a few years ago at Prime Grill, the famed Midtown kosher steakhouse. Herzka was seated at the next table with a few of his Meridian colleagues, and Schechtman said the group’s dinner felt more like “a boardroom meeting.”
“This is a workday that most people could not endure,” he added.
But Herzka seems to thrive on it and sought to make it part of his firm’s DNA. Meridian’s new official mantra is: “Eat. Sleep. Close. Repeat.”
“Ralph is moving upstream and is leaving a lot of smaller business open for his competition. You can’t do $120 million in business a day, which is his motto, and also do $2 million deals.”
After news about a new investment sales deal gets out, the buyer tends to receive a barrage of calls from Meridian brokers eager to arrange financing, sources said.
In a 2008 interview with the New York Observer, Herzka said his was a “high-energy business,” affirming the importance of having young brokers.
Sources said that Meridian is a great training ground, and alumni including Eastern Union Funding’s Ira Zlotowitz and Abraham Bergman, Brookland Capital’s Brett Kaplan and the Sapir Organization’s Gavriel Kahane hold important positions in New York real estate.
Regarding the so-called boiler room climate, Herzka said that in order to do so many deals, “We’ve hired a team that is the best in the business at both managing our firm’s volume and delivering for our clients.”
A new challenge
Given Meridian’s expanding market share of mortgage deals and its growth as a firm, something is clearly working.
Real estate players reckon Herzka’s success is built on relationships with a wide range of investors, ranging from private owners of mid-sized walk-ups to formidable frum investors with substantial holdings in the city.
Moshe Majeski of the Moshe Group, a one-man investment sales operation that is now a Meridian offshoot, learned the ropes with Herzka, starting at Meridian in 2000 as a gofer and later becoming a salesperson specializing in retail condos and co-ops.
About 18 months into the job, Majeski secured a long-sought meeting with a major New York City landlord. Majeski and Herzka met with the bigwig, who had already been in talks with another brokerage, to discuss the $80 million refinancing of his Upper East Side rental building.
According to Majeski, Herzka advised the landlord not to give the assignment to Meridian, telling him that the “’deal you have on the table is better.’”
Majeski wanted to close his first deal, but said he respected Herzka’s call, describing his boss as someone who “always puts integrity and honesty” before money.
“No question, we will lose a fee when we advise a client to take another broker’s deal or not to refinance,” Herzka told TRD. “But we secure the client’s loyalty and, most importantly, we do what’s right for the client. And that’s what this business is about.”