The Real Deal New York

CIM Group acquires loan at 47 East 34th Street extended-stay tower

May 26, 2011 02:29PM
By David Jones

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CIM principal and co-founder Richard Ressler, 47 East 34th Street (source: PropertyShark) and iStar CEO Jay Sugarman

Istar Financial has finalized a deal to sell the $84 million senior mortgage debt at 47 East 34th Street to CIM
Group, after the court issued a final judgment against the previous borrowers Esplanade Capital, according
to court records and financial documents obtained by The Real Deal.

Documents filed with the city Department of Finance on Wednesday show that CIM Group acquired the
loan from iStar on May 13, and court documents in Manhattan Supreme Court show that the Los Angeles-
based firm has filed documents to replace iStar as the plaintiff if the foreclosure case.

“My expectation is there will be an auction before the end of the summer,” said a source familiar with the
legal proceedings.


The Real Deal
previously reported that iStar and CIM were in negotiations. A price was not disclosed, but
iStar had been in talks to shop the debt for months, and previously turned down offers of $60 million for
the mortgage debt.

The deal marks the latest debt acquisition for CIM, which sources say has been in talks with Ziel Feldman’s
HFZ Capital to finance his planned acquisition of the debt at One Madison Park, a condominium at 23
East 22nd Street. CIM has also acquired the debt at William Beaver House
in Lower Manhattan, the former Drake Hotel site
and recapitalized Trump Soho, at 246 Spring Street.

The sale at 47 East 34th Street just about ends a long and tortuous legal battle with the developer Esplanade
Capital, which sued iStar for $150 million last year, alleging the lender conspired with another investor to
illegally foreclose on the 36-story mixed-use tower and allow BridgeStreet Corporate Housing to operate
an extended-stay property under a separate deal.

Esplanade had originally entered into a complicated agreement in 2007 with Dublin-based Sorrento
Asset Management, which planned to pay $96.7 million for the property under a “bulk-sale agreement.”
However, when that firm failed to make the payment, iStar called in a default and stopped funding
construction of the project.

Istar filed suit to foreclose on the property in 2009 when Esplanade defaulted on its loans, and in February
of this year, a state Supreme Court judge ruled against the developers.

BridgeStreet is under lease to remain in the building until the end of 2011, after the developers failed to evict them in 2010.

Attorney Matthew Parrott, who represented iStar and has taken over as lawyer for CIM, filed a motion
today in the foreclosure case to order the court-appointed receiver Michael Green, to hand over $2.8
million in rents to CIM. The funds would go towards covering accrued interest on the loans, Parrott said in
court documents.

Sources familiar with the talks say that CIM Group has been interviewing prospective operating partners
for the property, but it would likely remain as an extended-stay tower for the short term.

“The price per foot they’d be getting for a furnished [extended-stay] rental is [higher than] any [traditional]
rental type scenario,” said real estate attorney and developer Ed Mermelstein, who is not involved in the
deal.

Herrick Feinstein, the law firm representing Esplanade, declined to comment, as did Esplanade. Officials at
BridgeStreet were not immediately available. CIM Group officials were also not immediately available for
comment.

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