The Real Deal New York

Leviev under fire by investors at Apthorp

September 25, 2009 05:04PM
By David Jones

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Lev Leviev, the Apthorp

Israeli billionaire Lev Leviev’s Africa Israel Group is feeling the heat at the controversial Apthorp on the Upper West Side, as rival investors in the project are raising questions about the business plan and what they say is a lack of transparency at the troubled project.

Angry investors claim that Africa Israel Group and managing agent the Feil Organization have refused repeated requests for information about sales activity and other relevant data, but made a recent capital call for $2.1 million to fund an interest shortfall.

“I personally have asked for — and I believe others have asked for — the financial information that would justify the capital calls,” said one Manhattan-based investor who asked not to be identified. “I don’t know how they’re going to meet all their obligations under the condominium plan.”

Africa Israel and Broadwall Management, a subsidiary of Feil, were silent in recent months as they scrambled to sell 25 apartments — or 15 percent — at the Apthorp by the Sept. 15 deadline, the minimum number for the New York State Attorney General to approve the conversion.

Andrew Ratner, vice president of Broadwall Management, sent a letter to tenants on Sept. 2, declaring the plan effective, which means that the company signed sales contracts for more than 15 percent of the building’s units.

The Sept. 2 letter included a copy of the sixth amendment to the Apthorp offering plan, which includes significant discounts to existing market-rate and rent-stabilized tenants who want to buy a new apartment. The Apthorp recently cut prices significantly to outsiders in order to lure potential buyers.

For example, a five-bedroom, 4,300-square-foot apartment that is listed for $12.2 million for non-tenant buyers, is being offered in as-is condition for $10.9 million and for $4.95 million to tenant purchasers, according to the amendment.

Several potential buyers and sources within the rival investor group have questioned whether the Apthorp was selling apartments to legitimate owner occupants, as a number of buyers have complained of calls not being returned and site visits not being offered by the broker, Prudential Douglas Elliman.

“They were certainly not terribly interested in me,” said a wealthy West Coast investor who contacted the Apthorp and said he was willing to buy an apartment for cash. “There was no attempt to… show me anything.”

According to Streeteasy.com, there are no listings under contract at the Apthorp. Dolly Lenz, vice chairman at Elliman, said she did not understand the question about the listings and forwarded calls to Stuart Saft, attorney for the Apthorp developers.

Saft, one of the city’s top real estate lawyers, said that not only did the Apthorp reach 25 buyers before the Sept. 15 deadline, they are now up to 36 buyers, with tenants among them. Saft insists that all members of the Apthorp investment team, including the faction led by Maurice Mann, are being kept up to date with the plan.

“We’ve been meeting with representatives of all of the ownership groups and all of the lenders,” Saft said. “We wanted to make sure everybody was on board with everything that is being done.”

Saft said that the developers do not have any pre-approved financing lined up for borrowers, even though the Apthorp is only offering a mortgage contingency to tenants that choose to buy. Under current Fannie Mae guidelines, banks are asking for 70 percent of a condo’s existing units to be under contract before it will approve mortgage loans for apartments.

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