The Real Deal New York

Mann to step down at Apthorp

January 12, 2009 10:57AM
By David Jones

Facing litigation from his main investment partner and a potential foreclosure suit by senior lenders, Maurice Mann has agreed to resign as managing partner of the landmark Apthorp condominium conversion, according to sources familiar with the negotiations.

Mann, president of Mann Realty Associates, will be replaced at the Apthorp by Andrew Ratner, executive vice president of the Feil Organization, a Manhattan-based real estate developer and management firm, sources said.

The Feil Organization owns, develops and manages more than 18 million square feet of retail, office and industrial space, and manages and owns more than 5,000 residential rental units. Among the company’s residential properties are the Clermont, a 416-unit rental building at 444 East 82nd Street and Four Park Avenue, a 364-unit pre-war building at East 34th Street.

The sources said the move by Mann is in
response to mounting pressure from the lenders and Israeli billionaire Lev Leviev. Leviev, who filed suit in December seeking Mann’s ouster, is hoping that the resignation at the Apthorp, at 390 West End Avenue, will buy more time to prevent Apollo Real Estate from foreclosing on the property.

“There is an expectation that Apollo will give the new management an opportunity to take the project in the right direction and that if Mann signs the documents, [and steps] down, that foreclosure will be staved off,” according to one of the sources.

However, Mann’s formal resignation is contingent on certain “conditions” being met and sources say there are still disagreements between Mann and investment partner Leviev, over the terms of the resignation. Leviev’s attorneys sent a letter to NY Supreme Court Justice Joan Madden asking that Mann appear before the Beth Din of America, a rabbinical arbitrator sought by Leviev.

A group led by Mann and Leviev acquired the Apthorp for $426 million in 2006, and by 2007, decided to convert the historic 163-unit rental building into luxury condominium units. However, the record $2.6 million per unit price tag forced Mann to market the units for $3,000 per square foot, and lenders like Apollo and Anglo Irish Bank grew concerned that the business plan was not viable.

In November, Leviev floated a plan to hire CB Richard Ellis to find a buyer for the Apthorp, with an asking price of $552 million, according to court documents. Mann’s attorney Theodore Steingut told The Real Deal last month that no agreement to sell the building had been reached, as selling the building in the current market would have been “suicidal.”

In early December, Mann filed a $500 million suit in New York State Supreme Court, alleging that Apollo and Anglo Irish Bank were trying to force Mann to make a $23 million “ransom payment” to bring the loan into balance as an excuse to seize the building.

Leviev, a diamond merchant and real estate investor, filed an injunction in late December demanding that Mann appear before the Beth Din of America. Lenders were originally scheduled to move against the building by January 9, however the court granted a one-week extension, while Mann and Leviev argued about finding an appropriate arbitrator.

Y. David Scharf, the attorney for Leviev, declined to comment, while Mann’s attorney, Theodore Steingut, was not immediately available for comment.

Officials said that despite Mann’s resignation, he would continue as an investor in the building.

Meanwhile, JPMorgan Chase filed for a “Yellowstone” injunction against Mann on January 7. Yellowstone injunctions typically deal with a tenant trying to stop the termination of a lease by the landlord. Sources say that JP Morgan Chase is renovating a corner branch at 79th Street and Broadway, but JP Morgan Chase officials declined comment.

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