From left: SL Green President Andrew Mathias, 180 Maiden Lane, 280 Park Avenue and 3 Columbus Circle

SL Green Realty, the city’s largest landlord, has suddenly put a halt to its acquisition binge, Crain’s reported, and has turned its focus to filling the space it already owns.

Since the end of 2009 the firm has had a hand in many of the large office tower trades in Manhattan, bringing its portfolio to 34 towers and about 25.5 million square feet. SL Green even dabbled more heavily in retail properties and, for the first time, residential properties. Earlier this year, it assembled 49,000 square feet of retail space in Times Square with Jeff Sutton, and acquired an eight-building portfolio including 724 Fifth Avenue with Stonehenge Partners. Comments

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From the November issue: Three autumns ago, the collapse of Lehman Brothers knocked the wind out of New York’s real estate industry. Home sales flattened. Prices plunged. And, as layoffs mounted, office buildings emptied out. While there have been some spurts of activity, the industry has not gotten back to the highs of the boom. In fact, as the unemployment rate still hovers at an uncomfortably high level, and Wall Street (a once-reliable real estate engine) reports losses, it seems that a complete recovery might be years away.

All the same, there are signs of comebacks — whether they are from developers who once defaulted on mega-loans and seemed like pariahs, or stock prices that have bounced back from the doldrums at some public real estate companies. There are also geographic stretches of the city that had been pocked with empty retail spaces and empty condo buildings, but are now filling up with stores and residents. There are even some bankers who had been caught up in the subprime mess who are now back on the lending scene in a big way. [more]

SL Green Realty has stepped in to help developer Joseph Moinian stabilize his investment in 180 Maiden Lane, a 1.1 million-square-foot office building in Lower Manhattan, the Wall Street Journal reported, but Moinian will pay heavily for the aid.
SL Green, a mezzanine lender on the downtown property, has agreed to help Moinian restructure $292 million worth of debt in return for an ownership stake of 49 percent in the office tower, sources told the Journal.
Moinian’s debt on the building reached special servicing early last year, but he managed to extend deadlines to 2012, thanks to help from advisory firm Iron Hound Management. Another deadline is on the horizon however, as an 800,000-square-foot lease by American International Group is set to expire in 2014. [more]

From left: 17 Battery Place, the W Downtown and Joe Moinian

When the financial crisis hit New York’s commercial real estate market, many in the industry predicted one of its first casualties would be developer Joseph Moinian, but it looks like the reports of his impending demise were greatly exaggerated, according to the Wall Street Journal. Just as he once benefited from cheap debt, Moinian, of the Moinian Group, is now taking advantage of lenders’ reluctance to foreclose on property during the downturn to stay there. His current holdings exceed 20 million square feet in New York and other cities across the country. Earlier this year, Moinian announced that he had restructured about $400 million of debt backing two lower Manhattan properties, 17 Battery Place and 180 Maiden Lane, and arranged $150 million in new financing for the Ocean, a rental apartment building in the Financial District. Now, Moinian is working on deals with creditors on two of his most high-profile projects: the $240 million development of W Downtown Hotel and Residences and the $100 million upgrade of office tower 3 Columbus Circle, and talks could still break down, according to people familiar with the matter. Moinian, who declined to comment, said in a statement: “We have stabilized our portfolio to a great extent and will always be vigilant about protecting our assets and tenants/residents, as well as our investment partners.” [WSJ]

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Some developers and building owners opt to stop paying mortgages to get better loan terms

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From the June issue: As the commercial market continues to struggle in New York, an increasing number of developers here are turning to so-called strategic defaults to force lenders and special servicers to enter into negotiations for loan restructurings.

The trend comes at a time when lenders are under increased pressure to keep their loans current. It also comes as developers are struggling to maintain the cash flow they promised their lenders during original loan negotiations.

And the number of strategic defaults — where the borrower may technically be capable of making the loan payment, but delays doing so as a way to improve his negotiating hand — is expected to rise even more in the near future.

“Sometimes [it] literally has to show up as a nonperforming loan to get any movement as a workout from a lender,” said Matthew Anderson, a principal at Foresight Analytics, a market research firm. “You can also understand from the lender’s standpoint that they don’t want to be handing out a loan modification without a valid reason, because that creates a loss on their books.”

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From the May issue: Last month, one of the market’s most reliable indicators showed that Midtown landlords are still suffering — even as brokers claimed the period of steep rent declines in Manhattan was over. The effective rent — a closely guarded slice of data that measures how much office leases are worth when free rent and other landlord concessions are factored in — fell in the first three months of the year in Midtown’s Class A buildings, after rising over the fourth quarter of 2009.
Many brokers saw the decline in effective rents as the last gasp of the recession, but others said prices might fall for the foreseeable future. [more]

Lower Manhattan’s office market saw declining rents and record-low leasing activity during 2009, but ended the year with activity on the rise and vacancies on a recently-rare downward trend, according to the Alliance for Downtown New York’s Real Estate Market Year in Review for 2009 (click here for the full report). Rising from 7.4 percent in the fourth quarter of 2008 to 9.9 percent in the third quarter of 2009, office vacancies dropped off to 9.6 percent by the close of the year.

Commercial office tenants in the Downtown market tended to sign on for smaller spaces and shorter terms, according to the report. “Downtown may need to adjust further to compete with low-priced sublease space and precipitously falling rents in the Midtown market,” the report noted.
In the residential market, sales volume dropped 52 percent over 2008, largely on a decline in inventory. Meanwhile, rentals held up relatively well: vacancies in Downtown rental units hovered at around 2 percent, which the report attributed to consistent demand for such inventory. TRD [more]

Embattled developer Joseph Moinian has restructured the debt on three of his Downtown properties, 180 Maiden Lane, the Ocean Residences at 1 West Street, and 17 Battery Place. In total, the restructuring covers about $550 million in debt. His firm, the Moinian Group, renegotiated the $340 million mortgage and mezzanine loans on 180 Maiden Lane, while nabbing a $130 million first mortgage on the Ocean Residences and a loan extension on the Battery Place property, Bloomberg reported. [Crain's] and

Fighting back against a torrent of unflattering press last week, Joseph Moinian took to Steve Cuozzo’s column in the New York Post to set the record straight. Moinian told Cuozzo that he is “100 percent current” on loan payments for the Ocean, 17 Battery Park North and 180 Maiden Lane. Last week, Crain’s reported that Moinian was $90 million behind on payments at the Ocean and that he had admitted he’d miss loan payments on the two Downtown office buildings. “I never said that,” Moinian said. That the loans have been referred to a special servicer was a “routine” step, Moinian argued, noting law firm Stroock & Stroock & Lavan’s recently renewed 225,000-square-foot lease at 180 Maiden Lane. Sources said the deal was probably in the high $40s to low $50s.
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Kohl’s Department Store may be coming to Manhattan, and the company is eyeing the first five floors of Joseph Moinian’s 1775 Broadway tower at Columbus Circle for its new space. Unfortunately, the building’s lights are slated to go out by Nov. 16, unless Moinian ponies up the overdue electric bill, which is easier said than done. Moinian, who bought the building for $130 million in 1999, is also straining to keep up with loan payments on the 26-story property, which are expected to increase by 23 percent early next year. A source told Crain’s that Moinian could lose the building if he doesn’t land a major tenant like Kohl’s. Moinian already lost 475 Fifth Avenue to Barclays Capital last year, and has said he will default on loans at 180 Maiden Lane and 17 Battery Place North. Kohl’s, meanwhile, is reportedly also looking at alternatives to Moinian’s 1775 Broadway, like 224 West 57th Street and a Union Square space. [Crain’s]