The Real Deal New York

Newly restructured Apthorp team seeks new plan of attack

January 19, 2009 03:02PM
By David Jones

Just days after settling a very public legal dispute, the owners of the Apthorp are working furiously on a new plan to restructure pricing at the struggling condominium and are considering the option to convert the property back to a rental building.

Lenders, including Anglo Irish Bank and Apollo Real Estate Advisors, have given the newly restructured Apthorp team until January 30 to come up with a new business plan to save the troubled building.

“Right now there is no intention to change it, but as things [progress] you always have the need to revisit things,” according to a legal source familiar with the settlement. “The plan for now is to find the right price point.”

Leviev on Friday settled a month-long legal fight with co-owner Maurice Mann, after filing for an emergency injunction in New York State Supreme Court seeking to have him removed as manager.

Under the agreement, Mann had resigned as managing agent of the Apthorp in favor of Broadwall Management Corp. and Broadwall Consulting Services, two affiliates of the Feil Organization, a firm that manages more than 5,000 apartments and 18 million square feet of retail, office and industrial space nationwide. The agreement calls for Mann to keep his stake in the building and remain on the building’s board of directors. Andrew Ratner, executive vice president at the Feil Organization, was not immediately available for comment.

Sources said that Richard Marin, executive chairman of Africa Israel Investments’ U.S. subsidiary, represented Leviev in the negotiations with Mann and the other parties. An agreement was originally expected last Wednesday, the sources said, however a last minute legal dispute between Mann and investor Ralph Braha held up the final agreement until Friday. Braha is chairman of Braha Industries, a New York-based shoe wholesaler.

Since the New York State Attorney General’s office approved the offering plan in June, only one apartment has gone under contract at the Apthorp, at 79th Street and Broadway. Prudential Douglas Elliman, the exclusive listing broker for the Apthorp conversion, has eight apartments listed on its Web site ranging from $3.45 million for a 1,750-square-foot, two-bedroom up to $15.5 million for a 6,197-square-foot, five-bedroom apartment.

A copy of the schedule of offering prices, obtained by The Real Deal, shows a total offering price of $1.08 billion, based on the sellout of the entire building, which would make it one of the biggest condominium plans in New York history. In October, the first amendment of the plan called for $64.2 million worth of apartments to be sold as-is, without renovations, indicating an effort to stimulate new apartment sales.

Leviev accused Mann of mismanaging the Apthorp conversion, and rejecting a November plan to put the building up for sale for $552 million. Leviev, a billionaire diamond and real estate investor from Israel, asked the court to settle the dispute through a rabbinical arbitration court, called the Beth Din of America.

Mann, who led the original $426 million acquisition of the Apthorp, filed suit against Anglo Irish Bank and Apollo Real Estate in early December, after the lenders challenged his business plan and demanded he come up with $22.7 million in new equity to bring the loan into balance.

Upon closing the initial purchase of the Apthorp in March 2007, Anglo Irish Bank as senior lender to the Apthorp, agreed to loan $385 million for the project, while Apollo, as mezzanine lender, agreed to loan $135 million. Mann accused Apollo, a former rival bidder for the Apthorp, of hatching a plan to steal the building away from him.

Apthorp tenants claim that the previous management actively tried to harass tenants out of their garage spaces, so the owners could break the lease on the building’s underground parking garage and sell the units to new condo owners. City Department of Buildings records show that a partial vacate order exists on the garage, for unlicensed or illegal plumbing work.

A spokesman for the Apthorp said there would be no comment beyond an official statement released on the settlement. Anglo Irish Bank declined to comment, while Apollo Real Estate officials were not immediately available.

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