The last six apartments at the 12-story M127 condo — which had been on the brink of foreclosure after a failed sales attempt — sold out at a Roosevelt Hotel auction yesterday in a little more than an hour, according to the Wall Street Journal. It was the first successful auction by a Manhattan developer — Cardinal Investments — in over two decades, said Misha Haghani of Paramount Realty USA, who ran the event. More than 100 registered bidders attended, and winners paid an average of $840 per square foot for the apartments — a major discount. A 1,577-square-foot apartment sold for $1.24 million, 25 percent less than what a similar apartment fetched in 2008. Cardinal, which had sold only three units in the nine-unit building at 127 Madison Avenue in early 2008 and had nearly $9 million in debt on the property, yanked the remaining six homes from the market during the downturn. As The Real Deal reported last year, Cardinal was illegally renting those homes in the interim to short-term and extended-stay hotel guests. [WSJ]

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The last six apartments at the 12-story M127 condo — which had been on the brink of foreclosure after a failed sales attempt — sold out at a Roosevelt Hotel auction yesterday in a little more than an hour, according to the Wall Street Journal. It was the first successful auction by a Manhattan developer — Cardinal Investments — in over two decades, said Misha Haghani of Paramount Realty USA, who ran the event. More than 100 registered bidders attended, and winners paid an average of $840 per square foot for the apartments — a major discount. A 1,577-square-foot apartment sold for $1.24 million, 25 percent less than what a similar apartment fetched in 2008. Cardinal, which had sold only three units in the nine-unit building at 127 Madison Avenue in early 2008 and had nearly $9 million in debt on the property, yanked the remaining six homes from the market during the downturn. As The Real Deal reported last year, Cardinal was illegally renting those homes in the interim to short-term and extended-stay hotel guests. [WSJ]

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Donald Glascoff’s (left) Park Avenue Bank has been shut down with its deposits sold to Valley National Bank, headed by Gerald Lipkin (right)

Federal and state regulators have shut down the Park Avenue Bank and sold its deposits to Valley National Bank, marking the second seizure and asset sale of a New York City bank in two days. The State Banking Department closed the bank citing ineffective management and inadequate capital as well as a high volume of non-performing loans. “We determined that the management team’s inability to address the
problems in the consent order led to the bank being critically
undercapitalized,” said Richard Neiman, supervisor of the state Banking
Department. “This issue coupled with the high volume of non-performing
loans held by Park Avenue meant that the bank could no longer operate
in a safe and sound manner.” The FDIC entered into a loss-share transaction on $379.8 million of Park Avenue Bank’s assets. Park Avenue Bank reported assets of $520.1 million and deposits of $494.5 million, according to the FDIC. The bank’s four branches will reopen as branches of Valley National Bank. Last night, state regulators shut down and sold the assets of LibertyPointe Bank, the struggling lender owned by Brooklyn-based developer Shaya Boymelgreen. Asked whether the collapse of two small New York banks was a start of a new trend, FDIC officials acknowledged that commercial real estate lending is playing a larger role in bank failures. [more]

Smithtown Bancorp, one of the largest independent banks in the New York
area with $2.7 billion in assets, is facing a class action suit by
shareholders for allegedly hiding information about risky construction
and real estate loans that eventually led to intervention by federal
and state bank regulators. The bank was forced at the end of January to sign agreements, called
consent orders, with the Federal Deposit Insurance Corp. and the New
York State Banking Department, to reduce the amount of commercial loans
and improve its loan underwriting policies or face further regulatory
action, including potential seizure of its assets. The complaint, filed in U.S. District Court for the Eastern District of
New York, alleges that the bank provided false and misleading
information about the performance of its lending business and real
estate assets, causing company stock to soar on the NASDAQ markets. The
complaint referenced press releases and other statements where the bank
claimed to be outperforming rival banks during the real estate boom and
even after the capital markets collapsed in September 2008. “Defendants’ false and misleading statements had the intended effect
and caused SBI common stock to trade at artificially high levels
throughout the class period, trading as high as $24.50 per share on
Sept. 29, 2008,” the plaintiffs alleged. By Feb. 2, 2010, the bank’s stock price fell as low as $4.16 a share. [more]

From left to right: Kent Swig, Yair Levy, Harry Macklowe and Aby Rosen could be personally liable to lenders.

From the November issue: Contrary to popular belief, commercial lenders did not throw out all of their standards in the recent cycle of easy credit.
When developer Aby Rosen structured his $133 million loan for the
acquisition and development of the Shangri-La hotel at 614 Lexington
Avenue in April 2007, the mortgage document included a personal
guaranty to cover losses in the event of a default. Similarly, when Kent Swig negotiated $49 million in loans with
Lehman Brothers Holdings to develop a hotel and condo project at 45
Broad Street in the Financial District in 2006 and 2007, the bank
demanded a similar guaranty in the mortgage documents.
And other big-time borrowers such as developer Yair Levy and
investor Steven Elghanayan have made the same types of commitments to
convince banks to make loans on their projects. [more]