In a sign of Wall Street’s recovering interest in commercial property, banks such as Deutsche Bank AG, Goldman Sachs and JPMorgan Chase are weighing bids for parts of Anglo Irish Bank’s $9.5 billion U.S. real estate portfolio, according to the Wall Street Journal.
The portfolio, the largest to hit the market since the start of the recession, offers a relatively low risk opportunity to jump back into commercial property, the Journal said, as the majority of debt is concentrated in large cities such as New York, California and Chicago. There are around 250 properties in total.
“It’s the first foreign bank to sell its entire U.S. loan portfolio, and it will be a good test of the market,” said Robert Ivanhoe, head of the global real estate practice for the law firm Greenberg Traurig. [more]

Another construction supervisor and a demolition contractor were each cleared of manslaughter and criminally negligent homicide charges today by Manhattan Supreme Court Justice Rena Uviller, who said they were not responsible for the deaths of two firefighters at the former Deutsche Bank building in Lower Manhattan in 2007. According to the Daily News, Mitchel Alvo was acquitted of all charges, while the John Galt Corp. was convicted of misdemeanor reckless endangerment, which carries a likely $5,000 fine, but cleared of the two more serious charges. Last week, a Manhattan jury acquitted a senior site safety manager for Bovis Lend Lease and an asbestos abatement supervisor at the site of charges in connection with the case. [more]

The AFL-CIO plans to work with pension fund managers to ensure that at least $10 billion in union pension money is made available to fund infrastructure projects in the next five years, the New York Times reported. Richard Trumpka, president of the labor federation, is expected to announce the plan at a meeting of the Clinton Global Initiative in Chicago today.

Union officials said they intend to work with Deutsche Bank and other financial institutions to come up with financing to retrofit large commercial buildings. Building owners are hesitant to do such retrofits themselves because they are already highly leveraged, they said. [more]

New York Attorney General Eric Schneiderman is expanding his investigation into the U.S. mortgage industry, having teamed up with Delaware Attorney General Joseph Biden III in requesting information from Deutsche Bank AG and the Bank of New York Mellon about their roles as trustees overseeing mortgage securities for investors. As the New York Times reported, trustees were administrators — not originators or servicers — of the loans, and thus had not previously been under much scrutiny as part of other nationwide investigations into what fueled the industry’s boom and bust. But trustees were supposed to make sure that all documentation was accurate and accounted for — a responsibility that has already been called into question by a probe into shoddy foreclosure practices by some of the nation’s largest mortgage servicers. [more]

Litigation relating to the recently demolished Deutsche Bank building at 130 Liberty Street, between Washington and Greenwich streets, could endanger the budget for downtown projects such as the East River Waterfront, state officials have revealed.

According to DNAinfo, the Lower Manhattan Development Corp. is the defendant in an $80 million lawsuit filed by criminally-charged Deutsche Bank contractors Boris Lend Lease after the agency failed to make sufficient profit on the troubled demolition.

A fire at the site killed two firefighters in 2007 and Bovis is fighting accusations that they caused the conditions that led to the fatalities. LMDC is also suing Bovis for $100 million as a result of extra costs caused by contractor negligence. [more]

The United States government has sued Deutsche Bank AG and one of its mortgage subsidiaries for civil mortgage fraud, seeking hundreds of millions of dollars in damages, several U.S. authorities announced today.

The complaint (below in full) centers on Deutsche Bank’s MortgageIT, which it acquired in January 2007. According to the complaint, MortgageIT issued more than $5 billion in Federal Housing Administration-backed loans between 1999 and 2009, many of which were not eligible for FHA insurance and should never have been endorsed. It alleges that MortgageIT, which repeatedly lied in order to obtain approval as an FHA lender, turned a blind eye to the wrongful endorsements because they were making substantial profits off of resales on those FHA-insured loans.

The government said those loans have already cost upwards of $386 million in FHA insurance claims — a sum that is expected to rise as more and more MortgageIT loans default in the coming years.

In a statement, Deutsche Bank played down its role in the allegedly questionable activities of MortgageIT. “Close to 90 percent of the activity covered by the US Department of Justice allegations happened prior to Deutsche Bank’s acquisition of MortgageIT,” a bank spokesperson said. “When Deutsche Bank acquired MortgageIT in 2007, it was a Federal Housing Authority lender that had been operating within the oversight of the Department of Housing and Urban Development for nearly a decade. We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously.”

The plaintiffs, however, did not mince words in statements about the allegations. “MortgageIT and Deutsche Bank ignored every type of red flag and breached every duty of due diligence before underwriting thousands of federally insured mortgages,” said Manhattan U.S. Attorney Preet Bharara. “While the homes the defendants issued loans for may have been built on solid ground, the defendants’ lending practices were built on quicksand. Ultimately, prudence was trumped by profit, and good faith took a back seat to good fees.” TRD

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The Bank of China has agreed to provide a five-year, $260 million loan to refinance 3 Columbus Circle, the glass-walled office tower where the Moinian Group narrowly skirted a takeover attempt by Stephen Ross’ Related Companies earlier this year. Moinian had been trying to renovate the 26-story building when he defaulted on his $250 million mortgage last summer and Related moved to try to wrest control through a foreclosure. The plan was to demolish the 700,000-square-foot structure and replace it with luxury condominiums and a Nordstrom department store. But SL Green Realty and Deutsche Bank came to Moinian’s rescue, helping Moinian to pay off Ross and take back the mortgage. TRD [more]

From left: SL Green CEO Marc Holliday, 280 Park Avenue (building photo source: PropertyShark), and Vornado Chairman Steven Roth

SL Green Realty and Vornado Realty Trust have reached a preliminary agreement to recapitalize 280 Park Avenue in exchange for a stake in the 41-story building, according to Crain’s. The two landlords last month combined their debt positions in the property into a 50/50 joint venture after news broke that the ownership was seeking a capital infusion. It’s unclear how much capital the two real estate investment trusts might inject into the 1.2 million-square-foot building, which Broadway Partners and Investcorp purchased for $1.2 billion in 2007, and the deal could still fall through. [more]

Manhattan’s two largest landlords are teaming up for the first time in a bid to take over 280 Park Avenue, the struggling Plaza District office property that’s seeking a capital infusion amid dwindling interest reserves. According to Crain’s, SL Green Realty and Vornado Realty Trust have combined their interests in the property’s two adjacent towers into a 50/50 joint venture that holds a total of $400 million in debt. The news comes one week after it was reported that owner Broadway Partners, which bought 280 Park Avenue with Investcorp for $1.2 billion at the height of the real estate boom, had hired Edgerock Realty Advisors to find new investors for the 1.2 million-square-foot property. [more]

Scott Lawlor’s Broadway Partners is seeking a capital infusion at 280 Park Avenue as the building’s interest reserves dwindle and has hired Edgerock Realty Advisors to help find investors, sources told Crain’s. Broadway acquired the 1.2 million-square-foot trophy property with Investcorp for around $1.2 billion in 2007. The building has around $440 million in outstanding securitized debt, and while the loan payments are current, reserves are only at around $36 million. [more]