Citigroup has sold the servicing rights for a $2.6 billion real estate portfolio, including about 2,200 multi-family loans, to CWCapital, Bloomberg News reported, as the bank’s CEO Vikram Pandit continues offloading troubled assets. Citigroup declined to comment on what CWCapital paid for the portfolio.

“Citi’s decision to sell the portfolio is consistent with its strategy of reducing assets in Citi Holdings, CitiGroup’s portfolio of non-core operating businesses and assets,” said a spokesperson for Citigroup.

The portfolio includes about 2,200 multi-family loans from Fannie Mae with an average unpaid principal balance of $1.2 million, CWCapital said today in a statement. [more]

The price lenders must pay to move past the federal investigation into their foreclosure practices went up by $5 billion, the Wall Street Journal reported. And it could rise higher.

The ongoing negotiations between government officials and banks, which appeared close to being finalized in September at a cost of $20 billion to the nation’s five largest mortgage servicers, have centered on a new number: $25 billion. The final cost could eventually reach $29 billion.

The lenders in question are Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo [more]

The Starrett-Lehigh Building

From the October issue: In December 2007, less than a year before the fall of Lehman Brothers and as the vise of the credit crunch was tightening, SL Green Realty closed on one of the biggest deals of the decade: $1.575 billion for 388 and 390 Greenwich Street, the 2.6 million-square-foot office complex then occupied largely by Citigroup.

But SL Green, New York’s biggest commercial landlord, did not act alone in the $598-a-square-foot purchase. It had a little help from some loonies, or Canadian dollars. The REIT’s minority partner on the deal, taking a 49.4 percent stake, was SITQ, the real estate investment wing of Caisse de Dépôt et Placement du Québec, a Montreal-based pension fund. (SITQ has since merged with Caisse’s other real estate subsidiary, and now goes by the name Ivanhoe Cambridge.) [more]

Jamie Dimon, CEO of JPMorgan Chase

From the October issue: Wall Street is a place, but it’s also a state of mind. And that’s true now more than ever, as the headquarters of New York’s most powerful banks are no longer clustered on one particular Financial District thoroughfare.
Likewise, the homes belonging to the bosses of Wall Street’s biggest firms aren’t concentrated in any one place either. While there’s still some historic bias toward Uptown over Downtown, not every Wall Street titan gravitates toward the most exclusive white-glove co-ops. In addition, the success that these high-finance wizards have had with their NYC residential real estate investments is also all over the map.
What follows is The Real Deal’s rundown of who, where, and how they’ve done. First up is Jamie Dimon, CEO of JPMorgan Chase, whose address is 1185 Park Avenue. Click here for more. [more]

From the September issue: In the last few weeks, as many of the city’s big banks have been besieged by bad news, and the stock market has seesawed sharply in a short span of time, the question on many analysts’ minds is: Could a new round of pain on Wall Street trickle down to New York’s already vulnerable commercial and residential real estate markets?

Indeed, the thinking goes, the financial services industry and its numerous offices keep commercial occupancy rates high in Manhattan, while its well-paid executives buoy the high-end residential market. Meanwhile, its lower-rung workers drive demand for rental units, sources say. Wall Street has served as an economic engine of the city for decades,
ever since major manufacturing and energy companies — like Mobil, Exxon
and chemical company Union Carbide — abandoned their New York
corporate headquarters in the 1970s and 1980s for other (cheaper)
addresses. [more]
[more]

A federal judge has dismissed negligence claims by Consolidated Edison over the fate of the original building at 7 World Trade Center on Sept. 11, 2001, the New York Law Journal reported, after it collapsed into a Con Ed substation.

Southern District Judge Alvin Hellerstein said the events of that day were “much too improbable to be consistent with any duty” toward Con Ed by developer Larry Silverstein and Citigroup.

Silverstein’s 7WTCo., an LLC controlled by Silverstein Properties, was charged with two counts of with negligence related to the development of the building. Tenants were apparently permitted to install diesel-fueled backup generators. Claims against Citigroup alleged that “an unreasonable amount of diesel fuel” in two 6,000-gallon tanks was incorporated into the design.

For Hellerstein, the idea that Silverstein and Citigroup could have foreseen these circumstances was just too far-fetched.  [more]

From top: Aby Rosen, Michael Fuchs and the Seagram BuildingAby Rosen and Michael Fuchs, partners at RFR Holdings, have yet to find a buyer for their  49 percent stake in the Seagram Building due to the high asking price, Crain’s reported. The pair has looked to sell its stake since May for $700 million, which amounts to roughly $1,800 per square foot. The record price for an office building was set at 450 Park Avenue in 2007, at $1,585 per square foot.

Though Seagram, located at 375 Park Avenue near 53rd Street, is coveted for its location, its architectural design and its bevvy of elite investment firms paying high rents, Crain’s cites industry sources who say the price would need to be lowered to around $1,200 to $1,500 per square foot, in order for the stake to sell. [more]

Illustration by David ColeJuly 27 was a dark day for commercial mortgage-backed securities, or CMBS.
On that day, Goldman Sachs and Citigroup were set to begin selling a $1.5 billion batch of CMBS, secured in part by some New York City properties.
But at the last minute, Standard & Poor’s essentially put the kibosh on the deal. The rating agency said it had discovered a “glitch” in its methodology and would need more time to vouch for the worth of the mortgages at the heart of the bonds. Without the blessing of S & P, the deal died. And with that, the CMBS market — in which pools of real estate loans are bundled together and sold to investors — hit a major snag few had anticipated when the year began.
S & P’s move — along with wild stock market fluctuations, concerns about the debt crisis in Europe and the renewed round of economic problems — helped knock the wind out of the sails of the CMBS market and confirmed the industry’s worst fears of a slowdown. Many expected the CMBS market to quadruple in value from $13 billion in 2010 to $50 billion by the end of 2011, as investors started to regain faith in the strength of the commercial real estate market. Instead, they now expect CMBS issuances to be just $30 billion this year, which calls into question reports of the market’s recovery. [more]

A $1.5 billion commercial mortgage bond sale between Goldman Sachs and Citigroup has been scrapped, the companies said, because Standard & Poor’s would not rate the notes. According to Bloomberg News, the deal had been slated to close today but was delayed because S&P is reviewing its criteria for rating commercial mortgage-backed securities.

“Ratings are a condition precedent to closing and settlement,” Goldman Sachs and Citigroup said in the statement to Business Wire. “Standard & Poor’s had previously informed Goldman and Citi that they were prepared to rate” the transaction, they said.

The risk assessor explained the change in a separate statement.

S&P ’’is reviewing the application of our conduit/fusion CMBS criteria in relation to the calculation of debt service coverage ratios,” it said yesterday. [more]

U.S. banks are bickering over how to split the tab of a mortgage settlement, the Wall Street Journal reported, with Wells Fargo telling government officials it should pay less than Bank of America and JPMorgan Chase. The quarrel between the banks looks set to further delay the settlement relating to mortgage irregularities, with negotiations already having exceeded the mid-June deadline set by U.S. officials.

“As time goes on, banks will lose the PR battle,” said Paul Miller, a banking analyst at FBR Capital Markets, warning that investors will find the fighting off-putting. The terms of a settlement, he said, are less important than getting it done.

While all parties have agreed to a framework that would govern how banks meet their obligations once the deal is in place, including principal reductions on certain mortgages, forgiveness of second-lien loans, restitution to borrowers and dealing with foreclosure-related blight, the banks are still contesting tiny elements of the deal, the Journal said. [more]