Real estate dynasty's new chapter

Publicly, there has been no sign of anything amiss among the Rechlers, Long Island's first family of real estate.

But some noticed the oblique reference deep in one of the dozens of documents filed with the Securities and Exchange Commission since the acquisition of Reckson Associates Realty Corp. by SL Green Realty Corp. of Manhattan was announced in August:

Reckson, it said, had later "received a request by certain former members of management" for access to bidding materials and had rebuffed it.

Now the family acknowledges those former managers were chairman Scott Rechler's brother Gregg, 40, cousin Mitchell, 46, and uncle Donald, all of the family firm Rechler Equity Partners, who were considering a bid for the same suburban portfolio that Scott had just agreed to buy from SL Green as part of the deal for $2.1 billion.

This fall, even as the Reckson-SL Green transaction was being repeatedly delayed by rival bids from corporate raider Carl Icahn and dogged by accusations of a sweetheart deal, Scott Rechler was privately embroiled in a tense confrontation with his own kin about the deal, one that has ended with a corporate family schism.

Here's why: At the heart of the portfolio Scott, 39, is buying are a few of what might be considered the Rechler family jewels, the portfolio of premium Long Island office buildings developed by a family business spanning three generations, buildings such as the Omni Building and Nassau West Corporate Center in Uniondale, the second of which Rechler plans to sell to pay for his deal.

"Some of those buildings my brother and I built over 25 years ago and had in the family business for that long," said Donald Rechler, 72, who grew up with the company started by his father, William, and formed Reckson Associates in 1968 with his father and brother Roger, 64, Scott's father. Reckson Associates, now changing hands for about $6 billion, was worth about $300 million when it went public in 1995.

"My father told me never to fall in love with a building," Donald Rechler said last week, "but you can't help it."

At issue is whether Scott Rechler's private-equity venture was an open breach of a 2003 family agreement that any Rechler doing office or industrial business on Long Island had to do it through the family's private company, Rechler Equity Partners.

But Scott Rechler said he was under no such constraint and chalked up the conflict to family dynamics. "People who are type-A personalities, who have big visions and big goals, when you put them all together there is almost always going to be some level of drama," he said.

Mere jealousy of Scott's success, as some contend? The family's Rechler Equity, worth an estimated $500 million, was formed in 2003 to resolve the internal tensions that led to the departure of Gregg, Mitchell, Roger and later Donald from Reckson Associates, and the liquidation of most of their stock.

There are at least two sides to that story, too, which include shareholder unhappiness over the number of family members in Reckson's upper management, and dismay over Scott Rechler's ill- starred detour of Reckson funds and management energy into a failed dot-com venture. That venture was run by Jon Halpern, the Marathon Real Estate executive with whom he is now teaming to buy the suburban portfolio. Reckson's stock has doubled since the family's departure.

Under the parting of ways announced last week, Scott Rechler agreed to give up the use of both Reckson and the family name and sever business ties with Rechler Equity.

On Friday, Donald Rechler made clear that Rechler Equity, which until now has dealt exclusively in the family's industrial portfolio of 6 million square feet of space on Long Island, also intends to compete head to head with Scott Rechler in office development, with the expiration of a three-year noncompete agreement signed when Rechler Equity was formed.

Donald Rechler said it was important for his nephew to relinquish the business use of the family name "for clarification," because the business community has too often mixed up Scott's dealings with those of his cousin and brother.

"If your sister won the bowling championship and they kept saying you won the bowling championship, or your sister was getting a divorce and they said you were getting a divorce, you wouldn't like it too much," he said.

But the step also seems intended to make clear to all observers who the real bearers of the Rechler family legacy are. "We're the family. ... We're not having a ceremony and pulling his buttons off or anything; he is family, but he isn't representing us in a business sense," Donald Rechler said.

The Rechler family likes to keep a smooth facade, but it has had splits before. The We'Re Group, a Jericho-based development company, was formed a half-century ago when William Rechler parted ways with his brother Morton and brother-in-law Jack Wexler.

Scott Rechler, whose complex negotiations for the redevelopment of the Nassau hub depend largely on the trust vested in him as a seasoned scion of the Rechler dynasty, dismisses the idea that with the latest agreement he's given up his rights to the family legacy. He adds that Gregg and Mitchell have their own private venture, R Squared, that eschews business use of Rechler or Reckson under the same agreement that binds him.

"What's the legacy? It's not a name, it's what you do," he said. "This is what I do because to me the legacy is the values, making your community a better place to live and work. "

And however loudly money may talk, blood is still thicker than water. Even as negotiations with his brother Gregg bogged down, Scott attended his niece's bat mitzvah last month.

That's why their father Roger, who has stayed neutral, prefers to describe the conflict as simply a "division of real estate."

"I'd hate to see you paint this as a family quarrel," he said. "It's not a family quarrel, it's getting things straightened out, believe me."