Shabselses’ 50-Property Damis Holdings Portfolio Hits Markets

After selling their camp empire for over $400 million, Michael and David Shabsels are putting the rest of their real estate portfolio up for sale.

Dubbed Damis Holdings, the portfolio spans more than 50 assets, including a waterpark in Fishkill, New York, and a horseback riding resort in Highland, New York, along with industrial, multifamily and hotel properties located throughout the U.S. Bisnow first reported on the news.

A&G Real Estate Partners is overseeing the sale of the assets. 

Damis is the larger part of the Shabselses’ troubled real estate portfolio. The brothers owned 30 summer camps through Simad Holdings, which raised about $200 million in debt from the Israeli bond market in December. Damis held the Shabselses’ non-camp real estate.

In May, Simad revealed it would not make payments to Israeli bondholders, and $34 million had been diverted from Simad to companies controlled by the Shabselses. The brothers ceded control of both companies to restructuring officers who put the two companies into bankruptcy protection.

Bankruptcy revealed that both companies were plagued by a similar issue. 

Simad and Damis owed Merchant Cash Advance companies over $234 million, according to bankruptcy court filings. These companies provide a lump sum of money in exchange for high fees and weekly payments taken out of debtors’ bank accounts. Damis and Simad filed for bankruptcy to stop merchant cash advance companies from withdrawing money from their accounts. 

Simad’s camps sold quickly through auctions or private sales. So far, the company has sold 27 camps for $448 million, which was close to the initial appraised value for 30 camps of $466 million.

But the marketing process for Damis properties will differ from Simad’s. During Simad’s sale process, the debtors had to consider the emotional attachment of campers, alumni and camp directors to their beloved camps. Parents flooded the court with letters to the judge’s chambers, expressing their concerns about possible sales.

Damis’ properties, which include a medical office property in Valparaiso, Indiana, an office property in Trumbull, Connecticut, and a small retail center in Keene, New Hampshire, are unlikely to draw the same response. Among the portfolio’s more notable assets is the Splashdown Beach Waterpark and Rocking Horse Ranch in the Hudson Valley.

The Shabselses sought to buy properties where they could add a ground lease, allowing them to separate the ownership of the property from the land beneath. The Shabselses would then obtain mortgages on both parts. In effect, the Shabselses could obtain 100 percent financing by taking out two mortgages on the same property. 

The financing technique is not illegal as long as the borrower discloses to the lender that it is on both ends of the transaction.

But one lender alleged the brothers never told them about the structure.

TriState Capital lent $23 million to a Damis shopping center in Elmira, New York, under the impression that an individual named Mark Graham controlled the ground lease as an unrelated third party. TriState claims it later learned that Graham worked as an attorney for the Shabselses. 

Read more

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“They loved debt”: How the Shabselses’ play to leverage a half-billion-dollar summer camp empire spiraled into bankruptcy