New York-based real estate investment trust Gramercy Capital’s shares rose by as much as 14 percent after the company agreed to settle $549.7 million in mortgage debt by giving control of many of its buildings over to lenders, Bloomberg News reported.

Around 317 commercial properties were surrendered yesterday to lender KBS Debt Holdings in an initial transfer, Gramercy said in a statement.

“What remains of Gramercy may be an attractive acquisition target both for buyers of discounted financial assets and someone looking to acquire a public real estate platform,” Ben Thypin, director of market analysis for New York-based Real Capital, told Bloomberg. [more]

A portfolio of 195 properties is falling out of Gramercy Capital’s grasp after the real estate investment trust failed to pay off $790 million in loans, the company announced today. According to Bloomberg News, lenders SL Green, Goldman Sachs Mortgage, Citicorp North America and KBS Debt Holdings “may immediately seek to exercise available remedies, which will likely include attempting to foreclose on all or substantially all the collateral,” Gramercy said in a statement. The move comes as analysts say lenders are increasingly switching gears from the so-called extend and pretend strategy to taking back control and unloading their distressed assets. [more]

From left: SL Green CEO Marc Holliday, the Lipstick Building at 885 Third Avenue and 292 Madison AvenueSL Green Realty has agreed to buy close to $391 million worth of office and retail investments from Gramercy Capital. As part of the deal, SL Green will own the land and lease fee for three properties — the Lipstick Building at 885 Third Avenue, 2 Herald Square and 292 Madison — but will also assume about $266 million in debt, Crain’s reported. SL Green will pay $39 million to buy Gramercy’s 45 percent joint venture interest in the Lipstick Building, $26 million for their interest in 2 Herald Square and $19 million for 292 Madison’s land and lease fee. [more]

The Royal Bank of Canada has sued to force a sale of the Lipstick Building at 885 Third Avenue, the 34-story office tower that served as the backdrop for Bernie Madoff’s $65 billion Ponzi scheme, according to Bloomberg news. Haim Revah’s Israel-based Metropolitan Real Estate Investors, which purchased the property for $648.5 million from Tishman Speyer in 2007, defaulted on a $210 million loan from Toronto-based Royal Bank. Revah’s group also has a $60 million loan from Goldman Sachs and pays $11 million per year in rent to SL Green and Gramercy Capital for the ground beneath the tower. Revah has been facing shortfalls in rent revenue this year — in part because of the 16,000-square-foot trading floor still vacant after Madoff’s departure. Royal Bank is now seeking a court-appointed receiver to oversee the property and to arrange a sale. [Bloomberg]

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The Royal Bank of Canada has sued to force a sale of the Lipstick Building at 885 Third Avenue, the 34-story office tower that served as the backdrop for Bernie Madoff’s $65 billion Ponzi scheme, according to Bloomberg news. Haim Revah’s Israel-based Metropolitan Real Estate Investors, which purchased the property for $648.5 million from Tishman Speyer in 2007, defaulted on a $210 million loan from Toronto-based Royal Bank. Revah’s group also has a $60 million loan from Goldman Sachs and pays $11 million per year in rent to SL Green and Gramercy Capital for the ground beneath the tower. Revah has been facing shortfalls in rent revenue this year — in part because of the 16,000-square-foot trading floor still vacant after Madoff’s departure. Royal Bank is now seeking a court-appointed receiver to oversee the property and to arrange a sale. [Bloomberg]

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Third Avenue’s iconic Lipstick Building, scene of Bernie Madoff’s $65 billion Ponzi scheme, is nearing foreclosure, according to the Post’s Lois Weiss. Sources said the Royal Bank of Canada has hired Doug Harmon and Adam Spies of Eastdil Secured to market a $210 million mortgage it holds on the 34-story office tower at 885 Third Avenue, which was purchased by Israel-based Metropolitan Real Estate Investors for $648.5 million in 2007. Facing shortfalls in rent revenue — in part because of the 16,000-square-foot trading floor still vacant after Madoff’s departure — the owners have since depleted their loan reserves. Madoff had occupied three floors. One of those is now being paid for by the U.S. government; the other has been rented by Surge Trading, which bought Madoff’s company after the Ponzi scheme unfolded. SL Green is a likely taker for RBC’s loan, because as part of their purchase in 2007, Metropolitan sold 79 percent of the land below the tower to SL Green, Gramercy Capital and a private investor for $317 million. The building owners now pay $11 million per year in rent, which is slated for an increase in 2012. [Post] 

SL Green Realty has taken sole ownership of 100 Church Street, the 1.05 million-square-foot office tower in the Financial District that is currently 58 percent vacant, according to SL Green. The Sapir Organization defaulted on its loan in August, after which SL Green took over the building’s management and leasing. Following a foreclosure auction earlier this month, SL Green had taken over a 50-50 ownership stake in the property with Gramercy Capital for just $10,000, with an agreement to work out the $145 million senior mortgage from Wachovia Bank. Gramercy has since declined to fund its share of the capital to extend and restructure the debt, and instead transferred its interest to SL Green. The company now plans to begin lobby renovations and other improvements to the property and has enlisted the help of Newmark Knight Frank to increase occupancy at the building, which has been struggling to retain tenants. SL Green did not immediately respond to requests for comment. TRD

From left: SL Green’s Andrew Mathais, Roger Cozzi of Gramercy Capital, Alex Sapir of the Sapir Organization and 100 Church Street

Five months after taking back 100 Church Street from the Sapir Organization, SL Green and Gramercy Capital won the auction this morning to take over the Lower Manhattan office tower for only $10,000, as investors grew leery of millions of dollars in debt and empty space at the troubled office tower.

SL Green, the former owner of Gramercy Capital and a current investment partner, will share 50-50 ownership of 100 Church. SL Green took over management and leasing of the building in August, according to sources, and will remain in that role.

The new owners must also work out the defaulted senior debt, a $145 million senior mortgage from Wachovia Bank.

SL Green President Andrew Mathias, in an October conference call with investment analysts, said he expected the company to acquire additional properties through similar mezzanine auctions.

“As we have indicated on prior calls, we expect this market environment to produce additional opportunities within our mezzanine portfolio like 100 Church, giving us opportunity to grow our portfolio with quality assets at an attractive basis,” Mathias said on the call, according to a transcript by Seeking Alpha. [more]

The Sapir Organization’s office rehabilitation project at 100 Church
Street has financial challenges that extend beyond the scuttled lease
deal for the Claremont School that led to a lawsuit against SL Green
Realty last week.

Seven architectural and contracting firms that have worked at 100
Church Street in Lower Manhattan claim they are owed nearly $3 million
in unpaid invoices since March from the building’s owner, Sapir, a
Midtown-based developer and owner.
Between March and August, the companies filed mechanic’s liens totaling
$2.89 million, including $202,919 by Long Island City-based Remco
Maintenance and $1.7 million by Ecker Window, based in Yonkers,
according to a review of New York County Clerk records by The Real
Deal.  More

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Alex Sapir and 100 Church Street

The Sapir Organization has filed a lawsuit against SL Green Realty and Gramercy Capital to keep the companies from foreclosing on 100 Church Street, on which they hold some of the debt. The Sapir Organization alleges that the lenders prevented it from signing leases for space in the building that would have allowed Sapir to get loan extensions for the property. Sapir needed to lease a certain amount of space — the specific square footage is not immediately clear — in the building to qualify for extensions, but the property is 60 percent vacant, according to CoStar Group. The Sapir Organization had reached a deal to rent more than 255,000 square feet to the Claremont School, but the deal allowed Claremont to back out of the arrangement if the lenders didn’t approve the lease by April 17. The lawsuit alleges the lenders delayed the deal by requesting information that had already been provided. Claremont withdrew from the deal. Comments

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