Jemal: Big portfolio, unconventional methods

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People in the commercial real estate business look at all the properties Doug Jemal is buying around Buffalo and ask: How is he going to pay for all the work he’s taking on?

Jemal isn’t saying.

He wouldn’t talk to Investigative Post for this story. But in an interview with WGRZ, he gave what some might consider an unnerving answer to the question.

“We’re all going to run out of money. I’m going to die broke. There’s nothing that I’m taking with me,” he said. “Look, needless to say, you know my M.O. I’m a riverboat gambler. I’m a shooter. I’m not a mathematical guy that sits down and looks at spreadsheets and stuff like that. I like something, I go.”

That said, a review of public records shows Jamal’s projects have encountered few, if any, financial problems. In Buffalo, there are no records of liens, judgments or bankruptcies. Any difficulties he experienced in Washington, D.C., appear confined to his earlier years of operation, prior to 2007.

A deep dive on Doug Jemal

• Tuesday: His growing real estate empire, in Buffalo and elsewhere.
• Wednesday: Profile of a character and unconventional businessman.
• Thursday: His politics and campaign contributions.

Investigative Post has reviewed a wide range of public documents and interviewed 10 people who are familiar with Jemal’s business operations, including government officials and contractors. 

Our findings:

• The estimated cost of his Western New York projects (more than $400 million) far exceeds Jemal’s net worth of $150 million, suggesting that he is relying on banks or other investors to finance a good portion of the work.
• While he is not taking advantage of all the tax breaks available to him, he has pursued one subsidy program — and is in negotiations for another — that would direct a portion of his property taxes to improve areas around his developments, instead of going into the city’s general fund.
• Buffalo isn’t the only market where Jemal is buying up buildings. His company, Douglas Development, boasts a portfolio that includes more than 180 properties, mostly in Washington, D.C., Virginia and Maryland. The company, or affiliates, have recently purchased property in Syracuse and Nashville, as well.

All this begs the question: How much should Buffalo bank on a 79-year-old developer who, by his own admission, doesn’t sweat the numbers to carry off his ambitious plans?

For right now, just about everyone is willing to give Jemal the benefit of the doubt. After all, how often does a developer come along building such a large portfolio in a matter of just a couple of years? 

“When I see him, I see a person who loves to build,” said Town of Amherst Supervisor Brian Kulpa, who is working with Douglas Development on a plan to revitalize the Boulevard Mall. “That affinity for building has led him to be a face for the community and a face of hope in the community.”

Big money, big deals 

Records on file with the Erie County Clerk’s Office show several of Jemal’s projects — including renovations at Seneca One tower — are being backed with loans from prominent lending institutions, including M&T Bank, KeyBank and CNB Bank, which counts Bank on Buffalo as one of its subsidiaries. 

His biggest money deals so far involve Seneca One Tower and the Statler City Complex in Buffalo and the Boulevard Mall in Amherst. He bought Seneca One in 2016 for $12 million — a fraction of the $95 million it fetched in a prior sale in 2005. The Statler cost Jemal $7.75 million. For the mall and a nearby Wegmans store on Alberta Drive, Jemal paid $30 million. 

Reviving the 38-story Seneca One property and the historic Statler hotel are expected to cost $150 million apiece. The Boulevard Mall, where long-term plans call for dividing the property into subsections featuring mixed-use space, new streets and infrastructure, could cost $100 million. 

Jemal’s WNY projects

Source: Investigative Post research.

Jemal purchased the foreclosed mortgage on the Hyatt Regency Buffalo for $9.7 million. He has acquired a few other smaller properties in Buffalo, including the former police headquarters building on Franklin Street, which he bought from the city for $3 million, and old River Rock Incubator site, located on Rano Street, which cost him $525,000. 

In May, Jemal announced plans to purchase the Simon Electric Co. properties, a group of seven buildings with addresses on Huron, Ellicott and Oak streets. The properties are near the city-owned Mohawk parking ramp, a property Jemal’s company has submitted a proposal to develop into a mix of residential units and mixed-use commercial space. 

The board of directors for the Richardson-Olmsted Complex, the non-profit group that oversees the site, is negotiating with Jemal on a lease for 10 of the property’s 13 buildings, including three previously occupied by the Hotel Henry. As a private, nonprofit organization, the board for the complex is not required to solicit bids and can negotiate directly with a developer of its choice. 

Executive Director Mark Mortenson said members of his board were impressed by Jemal’s credentials and his work at Seneca One. He said Jemal has told board members he intends to redevelop the buildings without further government assistance. 

“What you see is what you get, and we know that they are ready and able to complete the task,” Mortenson said of Jemal’s team. 

Tax increment financing 

With one exception, Jemal has not requested any payment-in-lieu-of-taxes deals traditionally offered to developers tackling big projects. Such arrangements allow building owners to initially pay a fraction of their property taxes, which are ramped up over a period of years. 

At Seneca One, his company is taking advantage of a less-traditional arrangement. Tax payments from the tower will be allocated to what’s called the “Accelerator Buffalo Fund” over 25 years. The money will support various improvements around the building. Possibilities include ongoing efforts to return cars on lower Main Street, as well as new sidewalks, street lighting and as-yet-specified infrastructure improvements. 

The arrangement — formally known as tax increment financing, or TIF — was brokered with Jemal by city officials and representatives from the Erie County Industrial Development Agency, which will oversee allocation of revenue from the fund. 

“Hopefully, we’ll get more investment, more vibrancy, in and around that area,” said Brendan Mehaffy, executive director of Buffalo’s Office of Strategic Planning. “Part of the attraction effort is not just going on what’s inside in the building, but also what’s going on in the public right-of-way.”

Kulpa, the Amherst supervisor, said town officials are in talks with Jemal about putting together a similar deal to support the redevelopment of the Boulevard Mall property. Long-term plans call for the site to be subdivided. With traditional retail losing considerable ground to online shopping, Kulpa said the 63-acre mall property needs to be redesigned to accommodate residential and recreational space. 

“If we really want Douglas to cut this up and build the neighborhood the town is envisioning, we’re looking to take some of the tax capture and reinvest that into the infrastructure on the site,” he said. 

Who really benefits? 

Greg LeRoy, executive director of Good Jobs First, a national subsidy research and watchdog organization, said tax increment financing is often employed for projects involving buildings that have been empty for years. While not as commonly applied in New York, LeRoy said similar tax agreements have been used frequently in other parts of the country, including Washington, D.C. 

From the taxpayers’ perspective, LeRoy said it’s wise to monitor the redevelopment to make sure it is progressing as advertised by attracting new tenants and businesses. Over the long term, he said, it’s also important to pay attention to how the funds collected are being spent. The money should be less about satisfying the developer’s needs and more about enhancing the business district or the neighborhood where the project is located. 

“They should be about place-making,” he said. 

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Another thing to watch: where the property owner pulls new tenants for either residential units or office and retail spaces. LeRoy said projects that simply move people or companies from one part of a community to another aren’t promoting actual growth. 

“There could be an effect in which — because this will be a new kind of premium space — that a law firm or an architectural firm or somebody like that would want to move in, but they’re going to move out of another office they occupy in Buffalo already, or a Buffalo suburb,” LeRoy said. “So, the question is, are they helping grow the economy or are they just shifting things around? That’s one inevitable issue for a big rebounding project.” 

Jemal has so far had success in reviving Seneca One tower. In April, 90 percent of the building’s 115 apartments were leased and plans were announced to add a new four-story apartment building offering 33 more units. Seneca One is now home to M&T Bank’s new $58 million tech hub and a Brooklyn-based microbrewery has reportedly agreed to occupy two retail buildings on the tower’s east side. 

Other investments

Jemal’s appetite for acquiring real estate beyond Washington has not been confined to Buffalo.

In January, Jemal announced the purchase of a landmark M&T Bank building in downtown Syracuse. M&T was reportedly asking $5.9 million for the property. Terms of the deal were not disclosed. Jemal said he expects to invest between $20 million and $30 million to renovate the building with apartments, retail space and a hotel. 

Douglas Development owns 20 properties in Richmond, Va., and announced plans last year to launch a $5 million redevelopment of a former hotel building in the city’s central business district. 

Last February, Jemal offered $15 million in cash to buy nearly 15 acres that’s part of the Navy Hill project in Richmond. Local leaders were planning to finance a new arena to replace the Richmond Coliseum, which is located on the property. Jemal said he plans to refurbish the stadium instead. 

In April 2019, Douglas Development announced a partnership with Triangle Capital Group and Nakash Holdings on the purchase of a Hampton Inn & Suites in downtown Nashville for $101.5 million. A company affiliated with Matthew Jemal, senior vice president of Douglas Development, bought another building for $4.5 million Nashville earlier this year. 

On its website, the company describes its portfolio as having more than 10 million leasable square feet and more than 5 million square feet of developable real estate “in the pipeline.” That includes his projects in Buffalo, but, as his acquisitions in other cities indicate, Jamal’s interests are growing beyond the Queen City.

Mark Scheer