Amid Legal Battle With Former Partner, Besen Reboots As Advisory Firm
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Besen Group, the investment sales brokerage that has focused on the mid-market for the last three decades, is seeking a fresh start.
Amid a drawn-out legal dispute between the firm’s founder, Michael Besen, and his long-term business partner, Amit Doshi, the firm announced a complete restructuring into what company officials say is a whole new company.
The firm sent out a press release last week announcing a restructuring, just days before Besen accused Doshi, in a New York State Supreme Court sworn affidavit filed Friday, of "doing everything in his power to bleed the company dry" by withholding close to $800K in commissions.
Besen executives said Doshi has nothing to do with the restructured firm, which has been branded as Besen Partners. Overseeing the operation is Besen himself — who declined to be interviewed or answer questions for this story — plus five long-term Besen employees and three new hires. Besen Partners LLC was registered as a new corporate entity with the New York Department of State on Aug. 12.
“We do have a 30-year track record ... yet at the same time we are having a rebirth,” partner and Chief Sales Officer Ron Cohen, who has been with Besen for 15 years, said in a telephone interview.
Besen Partners’ team of 20 brokers has closed $60M worth of deals in the past quarter, Cohen said.
“In light of what’s happened in the industry and our own shop, we had to do a little soul searching and determine how to forge our path forward, and realized that we could do a much better job of leveraging our truly full-service capabilities,” Cohen said.
Instead of pure brokerage and property management, Besen Partners is a full-service advisory firm with a host of disciplines: investment sales, debt and equity placement, hospitality advisory, retail leasing, distressed asset advisory and sales, property and asset management, and residential sales and leasing. It also is launching a private equity fund that is under contract to buy its first office building in Connecticut.
Bisnow sat down with four members of the new executive team and a spokesperson to discuss the new structure last week at Besen’s NoMad offices.
"Before, when Besen focused primarily on residential or middle market brokerage, that was, for lack of a better word, a one-trick pony,” said Besen Partners’ new chief investment officer, Daniel Steinberg. “Now we can offer finance and we can solve any of [our clients’] real estate needs … I think that’s the biggest change, philosophically.”
There is no doubt that this rebirth comes with some baggage. For the past year, Besen Group — which Besen founded as Besen & Associates in 1988 — has been dogged by a back-and-forth legal dispute.
Court action began in May 2018, when Besen sued Doshi, his partner of 29 years, accusing him of mishandling the business and their various investments, The Real Deal reported at the time. This spring, Doshi, who has since joined Meridian Capital Group, filed a countersuit with the New York State Supreme Court, asking the court to dissolve the firm.
Doshi argued that he and Besen cannot "jointly own and operate the company" because of "severe dissension and irreconcilable distrust" between them. Both cases are ongoing.
Doshi and his lawyer declined to comment. Besen’s lawyer did not respond to requests to comment, and while Besen himself would not be interviewed, the affidavit he filed Friday shows his beef with Doshi is still unresolved.
In his sworn statement, Besen accused Doshi of obstructing the firm from getting access to $788K worth of commissions owed to Besen & Associates, which is currently held in an escrow account.
Besen also accuses him of failing to pay for necessary upgrades on properties they own together, and claims that Besen & Associates’ finances are in jeopardy and that its financial stability is threatened.
He said he is now asking that the court move to "stop the bleeding."
“Doshi is clearly shirking his fiduciary obligations to the company in favor of Meridian Capital,” he said in his statement. “In the wake of Doshi’s resignation from the company to compete against the company, these funds are sorely needed as the business regroups.”
Meridian Capital Group declined to comment through a spokesperson.
Besen’s new partners brushed aside any suggestion that litigation would tarnish the firm’s ability to move into its next chapter, and suggested the dispute was indicative of last year’s broker talent shuffle — which saw dozens of brokers switching firms.
Besen Group lost broker Greg Corbin and his team to Rosewood Realty Group this summer. Besen’s representatives denied his departure was a monetary loss.Timothy Serignese joined Besen Partners to run the firm’s residential arm, which will include both sales and leasing.
“I've been in real estate brokerage for 23 years now, this [litigation] is really small potatoes,” said Serignese, who was previously at now-shuttered Town Residential, according to LinkedIn.
Terrence Oved, a partner at Oved & Oved, who is not involved in the lawsuits, said former partners who are engaged in litigation forming new companies is fairly common.
“It is not inconsistent for litigation and the formation of a new entity to occur and proceed simultaneously," Oved said.
Steinberg, who joined as part of Besen’s recent purchase of Targeted Capital, a Connecticut-based merchant bank, said there was nothing off-putting about the lawsuits “when you know the facts.”
He said Besen’s vision for this new platform has been in the works for some time.
“Michael realized a while back that just being an investment sales brokerage is not a long life,” he said. “You need to do more full-service advisory, and that's why this has been implemented.”
Still, most would agree that building — or rebuilding — an independent brokerage right now is no easy feat.
The past 18 months has seen enormous reshaping of the brokerage landscape, particularly in the investment sales world. Last summer, Eastern Consolidated shuttered, leaving dozens of brokers scrambling for jobs. Independent players have been gobbled up by industry behemoths and there has been widespread consolidation across the industry.
New operations have also sprung up. Residential firm Compass, awash in venture capital, launched its investment sales shop last year, hiring Eastern Consolidated alumna Adelaide Polsinelli, and Paul Massey started up his own firm, B6 Real Estate Advisors, after leaving Cushman & Wakefield.
“There’s plenty of room in the marketplace for middle market, independent firms,” Massey said.
However, some sources said the sliding investment market — the city is on pace to reach a nine-year low in dollar volume this year — as well as the state’s historic new rent regulation laws would make it difficult for any firm.
“They don’t have a lot of wind at their back right now,” one industry source, who requested anonymity to discuss a sensitive topic, said of Besen’s new partnership.
“They’ve got a perfect storm: It’s an overcrowded investment sales market, there is existing litigation … They are known for doing more multifamily and that business is literally dead. They are rebranding towards advisory, but that is such a far reach and considering the way the platform has been set up for decades, that’s a tough thing to sell to the market.”
But Besen Partners’ new leadership team said this new iteration is perfectly positioned to take on the current climate. For one, they said, theirs is a multi-pronged approach, and business is performing well.
The investment sales side recently arranged a contract on a $12.6M apartment building at 140 Bay Ridge Parkway. Earlier this year, the retail team co-brokered the lease deal for a new restaurant called Luthun in the East Village.
The firm expects to close on a multifamily financing transaction in New Jersey next month, and is currently facilitating the sale of a portfolio of distressed properties in Lower Manhattan. This month, Besen brokers arranged the sale and leaseback of a restaurant space at 115 Allen St.
NYC Management, Michael Besen’s property management arm that manages over 180 properties, according to the firm, is under the umbrella of the new partnership. Doshi claimed in a March filing that he owns 50% of NYC Management, but it is exclusively managed by Besen.
"[The new setup] is a tremendous change from just dabbling in certain things and being an investment sales shop," Steinberg said. "So the goal is to be able to provide any potential service someone needs."