Fairstead’s founders said they wanted an amicable breakup. They got an ugly divorce.
In a new lawsuit, Will Blodgett, one of the multifamily investor’s co-founders, accuses his former partners of stealing tens of millions of dollars from him after he negotiated to leave the firm and start his own shop.
Blodgett claims his co-founders tried to leverage his equity in Fairstead to gain favorable investment terms in his new venture.
At stake are tens of millions of dollars generated by Fairstead’s real estate portfolio, which during Blodgett’s eight years there grew into a 16,500-apartment empire. The problems started in 2020 when Blodgett decided he wanted a bigger piece of that pie.
Most of his compensation came from carried interest, or a portion of the profits from some of the company’s special-purpose property ownership subsidiaries. Blodgett says he was entitled to 15 percent of Fairstead’s profits from these entities, on top of direct equity stakes he purchased alongside Fairstead in several properties.
According to his website, Blodgett had grown up on the wrong side of the tracks in Chicago, where most of his friends lived in public housing. Bullied for his stutter, he got into fights and was having problems at home and school, so his parents moved the family to Los Angeles.
Out of his element, he was failing classes at Laguna Beach High School until he joined the football team and devoted himself to working out and studying. He ended up with a scholarship to Yale, where he met his future wife — a Tisch, from the Loews hotel dynasty.
Given his rags-to-riches story, his co-founders at Fairstead, Stuart Feldman and Jeff Goldberg, might have been surprised when in June 2020 Blodgett told them he felt important people at the company were underpaid, himself included. In response, Goldberg purportedly asked Blodgett to come up with a restructuring plan.
The plan went nowhere, though, and Blodgett told Feldman and Goldman that he was thinking of leaving to start his own business. The co-founders were interested in investing in it, according to the suit, and were even open to Blodgett’s taking some of his team with him.
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Blodgett met with Feldman in September to have what he thought was a final discussion about the new business, according to the suit. Instead, Feldman allegedly gave him a termination letter canceling all his interests in Fairstead entities.
Feldman also proposed Fairstead get 35 percent of the revenue from Blodgett’s business in exchange for an offer to rescind the termination letter if Blodgett accepted, the suit claims.
“I rope-a-doped you, Will. I fucking rope-a-doped you,” Blodgett alleges Feldman told him.
Blodgett claims Goldberg later told him it was just an “opening foray” to gain better investment terms in Blodgett’s company. The matter came to a head in April, when Fairstead sent Blodgett a letter canceling all of his interests in the Fairstead entities.
Blodgett left in November and founded Tredway, then in May filed for arbitration, which he says his contract guarantees. In response, his former employer denied all the allegations and then refused to participate in the arbitration, saying Blodgett has no right to it.
Blodgett’s suit aims to force everyone to the table. Fairstead and Blodgett both declined to comment.
Fairstead, whose partners also include CBRE’s Steve Siegel, has continued to grow at a fast clip. Earlier this year, it acquired a 48-building portfolio in the Bronx for more than $350 million and looked to sell Savoy Park in Harlem, expecting $400 million. It also launched a $100 million proptech investment fund.
Despite its expansion, there’s one new company it hasn’t invested in: Tredway.