An Eye for Opportunity

by Jenny Owen

Coney Island developer Joseph Sitt (BS ’86) sees a future for the Brooklyn boardwalk and amusement park that is strikingly different from its storied and, often, seedy, past and present. But then again, where others see decay, Sitt sees opportunity. And that’s exactly how he’s built his real estate development company, Thor Equities, into a successful $2 billion-plus operation.

Sitt founded Thor Equities in 1986 while still a student at NYU Stern. His interest in real estate was piqued by a Stern finance class and galvanized by the entrepreneurial zeal among his classmates and the real estate environment in and around New York City, which, at the time, was flush with foreclosures as the mayor’s administration worked to stamp out urban blight.

Sitt started by purchasing a small property on East Tremont Avenue in the Bronx, financing it privately through family, friends, and parents of fellow Stern students, many of whom he found through Stern Emeritus Professor of Finance Frank Angell (BS ’41). “He was a one-man NYU alumni networking service,” said Sitt of Professor Angell. “If you needed financing, he hooked you up with a wealthy NYU grad. If you needed credit or banking, he would set you up with an NYU alumnus who went into banking. He was hugely popular with the students and was a guiding light to me in my early career.”

After purchasing the Bronx property, Sitt went in search of retail tenants. He reached out to national retailers, but didn’t get any takers, at least in the beginning. Instead, he worked with local immigrant retailers, before finally succeeding in bringing companies such as Rite Aid Corporation and Payless Shoes to the borough.

Sitt, a Brooklyn native, attributed his early interest in urban retail to a video game and an exotic bird. At age 12, he searched his neighborhood in vain for the Atari system and parrot that he wanted for his birthday, and in the end, was forced to travel an hour by bus and subway to Manhattan to find them. The experience gave Sitt first-hand knowledge of the frustrations facing inner-city shoppers, instilled in him a passion to turn the tide, and opened his eyes to the business opportunities available in these otherwise neglected markets.

Then, in the early 1990s, Sitt recognized how underserved the marketplace was for retailers and their products. “The greater void was not in real estate, but in retailers serving the customer, particularly urban career women,” he said. With a focus on upscale physical space, high-quality but affordable apparel, and top-notch customer service, in 1991 Sitt founded Ashley Stewart, a clothing chain for plus-size urban women, after a short stint owning and managing the Children’s Place kids clothing chain, as well as Marianne Stores, a retail outlet for Latina women.

The idea was one of the first of its kind. Sitt sensed the vast untapped purchasing power of urban consumers then being ignored by national retailers. “I wasn’t bigoted against the consumer,” explained Sitt. “Other retailers thought, ‘These people live in the city. They’re used to a little bit uglier surroundings, potholes in the street, and whatnot.’ Our earliest approach was that we wanted to have the same quality standards that you would see in any other suburban market in America. We invested money upfront, in either building a nice property or improving a property. A lot of the old owners back then had the philosophy that a penny saved is a penny earned, as opposed to ourselves, who had the policy of asking, ‘Where can we spend a penny and make a dollar for it?’” Sitt’s approach paid off, and Ashley Stewart quickly grew into a $400 million business.

Also part of Sitt’s strategy was to integrate the stores into their communities. Instead of launching large advertising campaigns to build the company’s brand, he held fundraisers, such as fashion shows, for community charities. He hired people from the neighborhood, and placed a lot of emphasis on training and motivating them. “I invested in good people,” he said. “We offered profit incentive programs for the employees.”

Offering “gainful employment” and career opportunities to low-income minorities is Sitt’s proudest accomplishment. He treasures the letter he received from former President Bill Clinton, who praised Sitt for having one of the largest placements of people through the Welfare-to-Work program.

Then, in 2000, as urban markets grew, the pendulum shifted and demand swung back to real estate ownership. That year, Sitt divested his stake in Ashley Stewart and devoted himself to growing Thor Equities. Focusing on urban markets, Sitt expanded Thor Equities beyond the Bronx and into greater New York City, as well as to Atlanta, Chicago, Detroit, New Orleans, Norfolk, and Philadelphia. The company also expanded its portfolio beyond retail to hotel, office, warehouse, and residential space and currently owns more than 10 million square feet.

Sitt’s most recent endeavor is also his most public – and nostalgic. Over the past few years, Thor Equities has spent north of $130 million buying up approximately 12 acres of land in the Coney Island amusement district. The company plans to build a resort complex – complete with hotels, restaurants, and year-round entertainment and amusement attractions – right next to the boardwalk. Sitt envisions a Coney Island reminiscent of its heyday in the early 20th century, when Sigmund Freud and Charles Lindbergh delighted in the thrills of the Dreamland amusement park.

The plans are under review with the mayor’s office, and the negotiations have been making a lot of noise in the local media. Despite the challenges, Sitt remains committed to the project. He sees it as more than a business opportunity; it’s also personal. Sitt grew up near Coney Island and spent his childhood summers there. “This is more of an opportunity for me to bring something home and do something good in my own backyard,” he explained. “I’d love to see Coney Island become what it once was when I was a kid.”

In addition to Coney Island, Sitt is focused on preserving another piece of history. His firm is currently spending $150 million on restoring the prominent Palmer House Hotel in Chicago, whose guests have included many US presidents, Buffalo Bill, Amelia Earheart, and Ernest Hemingway. Plans are also underway to expand Thor Equities into Dallas, Houston, Los Angeles, and other locations throughout the country.

Near and far, Sitt is in search of a turnaround opportunity. For this real estate magnate, betting against the odds has won him a windfall.

In It for the Long Run

by Rika Nazem

Stephenson began at Lehman Brothers in 1987, the same year she received her MBA from NYU Stern. She had previously worked as an analyst at CBS television and already earned an undergraduate business degree from her native England. At Lehman, she was soon staffed in the media and communications area, one of the high-growth businesses at the time. “My background had afforded me an in-depth understanding of the business, which was rapidly developing in many aspects – entertainment, broadcasting, cable, broadband – and so, the 1987 crash not withstanding, we executed a significant amount of high-profile business, such as the merger of Time Inc. with Warner Communications.”

In 1995, Stephenson was elevated to managing director, which coincided with her recognition of the growing importance of the private equity business. “I was already interacting with a number of the key players,” she said, and so along with another managing director, she moved to launch the Financial Sponsors Group. The early focus paid off and the firm rose to a leadership position on a global scale, advising the likes of Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group, Blackstone, Warburg Pincus, and Welsh Carson on multi-billion dollar financings and mergers and acquisitions. Some of her high-profile deals include KKR’s buyout of TXU Corporation, advisory work for Warburg Pincus’ investment in MBIA, and the buyout of directory publisher Dex Media for Welsh Carson.

Fast forward to today: Stephenson now co-heads Corporate Finance for the Investment Banking Division, a position she has held for a year and a half. In this role, she oversees all corporate and private equity client coverage for the division, which is organized into specialized industry verticals ranging from natural resources to health care to technology. “The banking industry is continually evolving,” she said, “and it is a highly stimulating environment. The one constant is that clients need trusted advisors. It’s a client service business where we are selling the intellectual capital of the firm.”

In addition to her responsibilities running the business, Stephenson is one of 10 people, and the only woman, on the Investment Banking Executive Committee, setting strategy for the Investment Banking Division. What is it like being a woman in a male dominated business and the only senior woman banker on the committee? “It has never been an issue for me,” she explained. “New opportunities have come my way and I have accepted the challenges. I have never felt overlooked and, frankly, when 95 percent of the time you are the only woman in the room, you often have an advantage, assuming you have proven that you know what you are doing.”

You also need to exude competence when the markets get rough. “This is a very difficult time in the industry – we have encountered challenging periods before, but this one will take some time to work through. In the interim, we are focused on the business and being nimble by moving resources to where the revenue opportunity is, whether in the financial institutions arena or in international markets.” Stephenson recently attended the World Economic Forum in Davos, Switzerland, with her colleague and fellow Stern alumna Madelyn Antoncic (MPhil ’81, PhD ’83), managing director, global head of financial market policy relations, and member of the management committee at Lehman: “The concern for the health of the global markets was the key topic, but business leaders were focused on solutions and the pockets of liquidity that do exist, such as sovereign wealth funds. It was a cooperative atmosphere,” said Stephenson.

Outside of Lehman’s boardroom, Stephenson maintains severable charitable interests and serves on the boards of the Southampton Fresh Air home, the Boys Club of New York, and Lincoln Center for the Performing Arts. She resides in Manhattan with her husband and four children.

When Stephenson talks about her job, the enthusiasm shines through. “If you don’t have passion for what you are doing, it is time to move on. Everyday my horizons are expanding, and that is the way it should be.”

Now heading into her 21st year at Lehman, Stephenson savors her thriving career. “I am happy where I am sitting now. Lehman has enjoyed tremendous success and the trajectory will continue. The firm has come a long way and it is gratifying to have been a part of it since the early days,” she said.