Michael Shah, 36, Founder & CEO DelShah Capital
Jericho High grad Michael Shah, whom we snapped with his painting by Jordan Eagles (primary medium: slaughterhouse blood), headed to Harvard from Long Island’s North Shore intending to become a doctor. After taking the MCAT, he detoured to the London School of Economics for his master's, inspired by some not-great investing by his parents and by the fact that doctors often aren’t good at the business side of their operations.
But Michael liked economics and finance so much he skipped his med school interviews. By the time he graduated with an econ and finance master's, the dot-com bubble had just burst, crashing the NASDAQ. So he headed back to Boston for his JD, graduating in 2003 as valedictorian of Harvard Law.
Next step was the gold standard of law firms, Wachtell Lipton, known for pulling in the highest profit per partner. That also meant partners kept up the same grueling 100-hour weeks as associates. So, in March 2005, Michael quit the M&A and bankruptcy firm without another job lined up and explored the city with his earnings.
But going out got old, and after a year he decided it was time to do something again. By this time, in ’06, real estate was super hot, but he didn’t have a ton of connections. Affordable housing looked like a good niche, Michael figured.
He’d helped his parents with some investments in that area while he was in school, his legal background put him in a good spot to navigate the regulations, and the lack of glamour meant little competition.
So DelShah Capital made its first acquisition in ’06: $6M for the 60-unit 1314 Seneca in the Bronx’s Hunts Point. He held that through the downturn until 2012 and made a modest profit, perhaps $1M. Through 2008, he also bought a Staten Island HUD-backed affordable housing property, a student housing building in Brooklyn, a more upscale affordable project in the Bronx’s Castle Hill, and a co-op conversion in Manhattan.
After the recession, he took advantage of Fannie and Freddie affordable housing mandates and recapped those properties in his portfolio (in the past 18 months, he sold off those 500 units). During the downturn, Michael also started buying distressed debt from NY regional banks, becoming the go-to guy to buy into complicated deals. From ’08 to ’12, he bought $120M of debt, and he owns most of those assets now, worth more than $200M.
He also got into restaurants, having acquired buildings where those tenants were struggling, like Niko at 170 Mercer in SoHo and The Vinatta Project at 69 Gansevoort, which he evicted. Now he’s negotiating retail leases for those spots and restaurant leases for 58 Ninth Ave and 55 Gansevoort. He’s also selling the last penthouse condos at the Renwick Modern in Hudson Square. And in two weeks, he’ll close on the sale of the last of his three DC properties (an apartment building, a townhouse, and the Embassy of Georgia).
Michael is close to a contract on a furniture company’s manufacturing, showroom, and office on 17th Street, which he’ll either convert to residential or lease up as office (it'd be his first office property). On his radar are resi conversions that can be completed within two years (he’s comfy with the supply-demand imbalance within that window), properties with large tax liens, and tenant-in-common deals (the more complicated, the lesser the chance of overpaying).
