This apartment magnate lived large on a $2B portfolio. Now, he’s in retreat.

Jonathan Holtzman isn’t a religious person in any sort of traditional sense, but he does believe in God, the natural world — and capitalism. Deep to his bones.

And it’s not hard to see the allure of the latter, from his perspective.

In the span of just three generations, it has afforded Holtzman — the visionary multifamily developer grandson of a Russian Jewish immigrant — an adventurous, almost Instagram influencer-worthy life outside of his work building and managing apartments.

But make no mistake. He’s a serious person with serious bonafides, developing perhaps 25,000 apartments over 150 projects during a 45-year-plus career. Part revered, part feared.

Discursive and soft-spoken, a velvety veneer on a legendarily leathery temper, Holtzman travels the globe not only for pleasure — he celebrated his 70th birthday in September by swimming with humpback whales off the Tonga coast in the South Pacific — but also his wildlife foundation, which sponsored the red panda exhibit at the Detroit Zoo, and a professional car racing career, fulfilling a passion he has had for most of his life.

Yet there’s been a glaring problem recently: Capitalism, as of late hasn’t reciprocated a belief in him or his former company, Farmington Hills-based City Club Apartments LLC, which ceased operations Aug. 31.

Nor have many investors, or lenders, or contractors, among others.

Lawsuits in courts across multiple states against City Club and its affiliates say the company, which less than a decade ago claimed a $2 billion portfolio and some $750 million in the development pipeline in Michigan and across the Midwest, has been late on payments on loans with principal totaling hundreds of millions of dollars.

More than $15 million in construction liens have been filed in the last two-plus years across multiple states, according to a Crain’s analysis of public records. Many have been resolved.

A past-due office rent bill of a comparatively paltry $64,000 forced what was left of City Club Apartments LLC to the streets last year, although City Club’s former landlord says in court filings that it owes more than $700,000 on the entire term of the lease agreement.

Essentially, Holtzman is in retreat, with creditors nipping at his and his companies’ tails.

“My company doesn’t exist anymore,” Holtzman, the co-founder, along with Toronto-based Alan Greenberg (whose company did not respond to multiple requests for an interview) of the now-defunct apartment development and management firm said matter-of-factly during a late October half-sandwich-and-soup lunch at Steve’s Deli in Bloomfield Township.

“There are no employees. It’s just me and some consultants,” Holtzman said, sitting in a two-person booth over the course of nearly two hours in a restaurant where two hot dogs and beans cost $23.99.

The fall of City Club Apartments

In short: City Club Apartments, borne out of a bitter business divorce with his former company, Village Green Cos., in 2016, has gone kaput.

He may not seem flustered over the situation, but that doesn’t mean it isn’t serious.

Buildings in Detroit and other large Midwestern cities have fallen into receivership. Lenders have sought foreclosure after loan defaults. New ownership structures have been instituted, with Holtzman’s stakes diminished or eliminated, and third-party management brought on — among them, St. Louis Park, Minn.-based Saturday Properties, Farmington Hills-based Friedman Real Estate and, in an odd twist, Village Green, the company with which he once sparred in federal court over which company is actually 100 years old.

In some cases, the name “City Club Apartments” or its acronym “CCA” has been unceremoniously scrubbed, with new management opting for names like “The Millie on Brush,” a cutesy abbreviation of “Millender,” the building’s namesake Robert Millender Sr.; and Washington Park Apartments, a vanilla nod to the intersection in downtown Detroit near which the tower sits.

The new colorful development on the former Statler Hotel site at Grand Circus Park is now just CBD Detroit Apartments, with the “CCA” that had been at the beginning removed. That has played out in other states, as well.

If you ask Holtzman, he says you can chalk up City Club’s failure to an interrelated series of external challenges brought about or exacerbated by the COVID-19 pandemic.

Those challenges, he says, include everything ranging from a depleted downtown job market, hybrid employment, interest rates, construction costs, low rents, tenants skipping payments and “activist” courts, among others, forcing him into what he calls “retirement,” with City Club buckling under the weight.

What was once a company with 250 or more employees ranging from executives to property managers is gone. It had no fewer than 8,500 apartment units at one time; the number of units in which Holtzman has a stake is unknown.

City Club’s website in 2020, according to an archived version, listed 18 apartment communities; today, it lists just three.

But Holtzman’s self-described “retirement” may be a bit of a misnomer.

He says he is now serving as what he called a “free adviser” to former executives of his he declined to name — who formed a company called Stack Partners and are still attempting to bring some of the projects he had planned across the finish line — in Detroit, Ann Arbor, Chicago and Pittsburgh.

Stack Partners has not yet been incorporated in Michigan.

“For 45 years, my apartment communities and my companies have won national and international awards, and I never had a default or a receivership. But then the last two years I have,” Holtzman said.

“For the longest time, I was admired, respected, and now I’ve got some lawsuits. I’ve got some defaults. I’ve got some receiverships. But that’s a few things here and there,” Holtzman said in a conversation earlier this month. “I’ll deal with the court issues and look for my day in court. The receivers and the defaults, I think they’ll turn out just fine because it’s great real estate and the economy is improving, I think, step by step. People will take potshots at me. Jealousy, you know how people are.”

Over-leveraged assets

Holtzman says he is trying to preserve the assets he owns, although that may prove difficult.

“I want to deal with whatever the problems are, see if I can save the real estate, save the investors, save the lenders, save my relationships with neighborhoods, the renters. That’s what I do every day, try to do that and be ready and take care of the real estate that I still own,” Holtzman said.

According to former business associates, Holtzman’s eyes got too big for his stomach on multifamily development in Detroit and around the Midwest. He was over-leveraged and he scorched too many relationships — relationships that could have been helpful when he was struggling — to salvage City Club.

Pro forma assumptions were pushed to their breaking point, one source familiar with the matter said.

Many properties did not have positive cash flow and were either in foreclosure or on the brink of it. Personal guarantees are being called, with a $9 million judgment out of New York threatening to put — as one of his attorneys described it last year in court — “him into bankruptcy and/or put him out of business.”

But still, the precipitous two-year decline of City Club is somewhat illustrative of problems facing the broader market-rate Detroit apartment development community. And those problems have complicated matters in a city in need of new housing to drive down costs.

The problem is, if you build it, you face a complicated gale of headwinds that have challenged a plethora of Detroit apartment building projects, both proposed and completed, ranging from slow leasing to rent issues to construction costs that have left some attempting to unload buildings or them going back into the hands of lenders, or in general financial distress.

“The downtown, Midtown and New Center markets have certainly been met with some distress,” said Kevin Dillon, senior managing director of investment sales in the Birmingham office of Berkadia. “Select properties have experienced significant value and operational challenges, whether they are over-financed, dealing with floating-rate debt, occupancy issues or not able to achieve the pro forma rents that were initially intended for the property. The market shift over the past two years has negatively impacted property values, creating challenges for the owners and the equity. In some instances, the decreased values have impacted their ability to obtain new accretive financing or sale opportunities. It is very unfortunate that investors and lenders have lost capital in the market.”

Deals flounder

Since the pandemic began in early 2020, City Club buildings and City Club itself have been floundering in Midwestern markets outside of Michigan: Cleveland, Chicago, Louisville and elsewhere.

In downtown Cleveland, City Club lost control of its recently completed 23-story apartment tower, forking over its ownership interest to Detroit-based attorney Stanley Dickson, who has not responded to multiple interview requests over phone and email from Crain’s Detroit over the last several months.

Dickson, however, told Crain’s Cleveland Business that “it’s well known that Jonathan is struggling,” although Dickson declined to elaborate.

The Cleveland project, now called Skyline 776 rather than City Club Apartments Cleveland, a nod to its location at 776 Euclid Ave., had five liens since 2021, although all had been paid, according to Crain’s Cleveland.

In Cincinnati, Dickson also recently bought Holtzman out of a $90 million redevelopment of the 31-story Union Central Tower, expected to be converted into nearly 300 apartments, according to the Cincinnati Business Courier. Dickson told that publication that instead of being called City Club Apartments Union Central, it will be named Sky Central.

In Chicago, Old National Bank sued City Club over its $25 million loan taken out in 2016 on a 21-story apartment tower at 860 N. DeWitt Place, trade publication The Real Deal reported in April. It foreclosed on the 147-unit building and put it up for sale with Dallas-based CBRE Inc.

A spokesperson for City Club at the time told The Real Deal last spring that Holtzman’s company “expresses regret for the current situation affecting residents, lenders, and investors,” attributing it to “external factors beyond our control.”

And in October, City Club was slapped with a foreclosure lawsuit after it missed a payment on a $66 million loan by San Francisco-based Prime Finance on a 190-unit property in the Windy City’s Loop area, The Real Deal reported.

In Louisville, City Club appears to have lost control of the 800 Tower in that city’s central business district. The 29-story, 286-unit building constructed in 1963 received an $11 million renovation by City Club in 2017. Six years later in 2023, City Club took out a $42 million-plus Fannie Mae loan.

But Fannie Mae sued City Club over the mortgage last year.

The Kansas City Business Journal reported that City Club was “walking away” from its 283-unit building opening in 2020 along the city’s streetcar route. A receiver was appointed after City Club told its lender on an $80 million loan it was unable to operate the property any longer, KCBJ reported.

When City Club formed in 2016, it also intended to pursue development in St. Louis, although two years later in 2018 it said it shifted away from that market to concentrate on others.

“At this particular point in time for him, it became very difficult because of floating interest rates and inflation,” said Wayne Moretti, a longtime Chicago area investor with Holtzman. “All those things didn’t go over well. Very difficult to deal with that because good deals failed to pencil out when rates rose to the rate they did. The efforts are ongoing, and he has made great strides to create some institutional money to capitalize and recapitalize deals.”

Troubles in metro Detroit

Holtzman’s troubles are also playing out in Detroit and the surrounding suburbs.

The nearly 300-unit Regents Club of Troy complex is delinquent on a $59.3 million loan, according to commercial mortgage-backed securities data from CoStar Group Inc., a Washington, D.C.-based real estate information service.

Local investors Jeffrey Farber, Howard Wolpin and Noel Upfall have sued him in Oakland County Circuit Court, demanding their investments totaling north of $2 million back.

In Detroit, Holtzman has lost control of the CBD Detroit Apartments building at Grand Circus Park as Wolverine Building Group, based out of Grand Rapids, sued on a $10 million-plus construction lien over unpaid bills. The company’s general counsel, Ruth Skidmore, said earlier this month that its lien claim has been resolved and a foreclosure action abandoned.

In Elmwood Park, an effort to renovate an 18-story apartment tower at Larned and Chene streets was completed but City Club is eight months behind on its $28.1 million CMBS loan and underwater, according to CoStar, and risks losing that building, as well. It was put up for sale for $35 million last year. Although it was appraised for $43.7 million in November 2021, in October it was valued at a shade over $22 million, according to CoStar data.

Straddling the Brush Park and Midtown neighborhoods, Holtzman’s plan to build a new 350-unit apartment building and add a Target Corp. store to the city — its first in more than 20 years — has floundered, with no construction started and the Minneapolis-based retailer bailing on the signed lease, citing construction delays.

Over lunch in Bloomfield Township in October, Holtzman said efforts were underway to replace the failed Target with a Trader Joe’s grocery store and revive the project. In September, Nakia Rohde, public relations manager for Trader Joe’s, said the grocery store does not “have a location confirmed in Detroit.”

Holtzman said in January that after Dickson bought him out, Dickson and Stack Partners failed to reach an agreement to develop the site together and it has since reverted back to the Nyman family.

That project’s fate is unknown. In an emailed response to an inquiry, Nyman declined comment.

To Matt Lester, CEO of Bloomfield Hills-based Princeton Enterprises LLC, it’s a remarkable downfall of an industry titan who was revered in the 1990s and 2000s. Holtzman’s and Village Green’s training programs for employees and use of technology, even decades ago, were trend-setting.

“They were all things that people like myself and other people who are leaders in the industry watched and copied,” Lester said. “But something in recent years has gone wrong, and there is so much chatter that it’s hard to even know exactly what it is.”

Real estate in his blood

It’s the summer of 2023.

In a conference room in what was then his Farmington Hills office, Holtzman isn’t wearing shoes. In modern parlance, somewhat of a flex.

But when you’ve had a career like he has — for all its peaks and valleys, for all the relationships that he has both forged and lost, for all the people ranging from low-level employees to CEOs who wound up on the receiving end of his outbursts — some norms become, shall we say, optional.

Holtzman was born into a prominent real estate family that came to the U.S. the year Tsar Nicholas II was coronated, eventually leaving St. Louis for Detroit in 1914 for the same reason tens of thousands of others did: The promise of $5 a day working for Ford Motor Co.

But Holtzman’s grandfather, Joseph Holtzman, wanted more than just sweeping assembly line floors. So he began building modest single-family homes in the growing city, ultimately developing some 10,000 of them as one of the first licensed homebuilders here.

You can even still find his name on plat maps (the Joseph Holtzman subdivision is on the city’s far east side, near Kelly and Morang, for example). You can also find his work still on the city’s west side at Fenkell and Greenfield.

So while Jonathan Holtzman is not, by most standards, a self-made man, the third-generation developer is widely credited with taking what became the family’s apartment company, Village Green, to the next echelon, rising to the coveted National Multifamily Housing Council top 50 lists of owners and managers on a regular basis.

Dillon, of Berkadia, described Jonathan Holtzman as someone who saw trends in the industry well before others did.

“He was a visionary in his mission to renovating older apartment communities into Village Park communities, developing Class A communities in or around suburban areas, and then transitioning to urban core developments,” Dillon said in a statement. “It’s unfortunate to see the recent circumstances that have been detrimental to his new company City Club Apartments and his career.”

Making his life simpler

That career has afforded Holtzman the ability to traverse the globe, visiting dozens of countries and funding wildlife and conservation efforts, another one of his passions.

Since its inception in 2015, his foundation has funded dozens of efforts to protect endangered species around the planet, ranging from jaguars in Brazil to painted dogs in South Africa, and lemurs in Madagascar to tapirs in Costa Rica. It gives grants of $25,000-$50,000.

But you don’t have to travel across an ocean to see the foundation’s work.

Perhaps the most high-profile effort it has done, at least locally: The red pandas housed in the Holtzman Wildlife Foundation Red Panda Forest at the Detroit Zoo, home to Ravi and Ginger, which gave birth to a pair of cubs, Patti and Ponya, this past summer.

“We all have different ideas of god,” Holtzman said in Farmington Hills in 2023. “I’m overwhelmed by the planet, wildlife and nature and the diversity of it, the interconnectedness of it. And what man is doing, in a negative light.”

Another passion his nearly half-century career has granted him?

He is also a professional racecar driver, racing his two Tyrrell P34s around the world, some 40 years after rediscovering the passion he had as a young man, abandoned in his early 20s to go into the family business.

Although he has accumulated a car collection over the years, he is attempting to unload at least some of that.

Holtzman says he has been making his life more simple recently, discarding material possessions by, for example, not renewing an apartment lease he had in Chicago and parting ways with some of his cars.

“I said, ‘I’m not driving these cars. I’ve enjoyed these cars. I’ve owned them since 1989, 1990.’ So I said, ‘Why not sell some of the cars? Why not sell some of the things that you’ve owned for a very long time? You have insurance. You have to maintain them. Why not make your life simpler,’” Holtzman said, channeling a Marie Kondo-esque approach.

Still for all the tumult in his business career the last two years, it could have been much worse for Holtzman, who survived a bout with tonsil cancer.

He declined to discuss his health scare further, but drew parallels to the high interest rate environment that he says, in part, has led to some of his troubles in business.

“It’s like chemotherapy and radiation,” Holtzman said of Federal Reserve interest rate increases meant to tamp down inflation, one of the things he blames for the downfall of his company. “You save the patient with the cancer surgery. Now you’re going to kill them with the radiation and chemotherapy. So which one do you want to kill them by, you know?”

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