The site of the 2008 crane collapse

A New York state appeals court refused Tuesday to dismiss a lawsuit brought by Arbor Realty Funding against Herrick Feinstein LLP over allegedly bad zoning advice on a Turtle Bay condo project that was the site of a 2008 crane collapse, Law360 reported.

In the 2011 suit, Arbor alleged that it would not have provided $70 million in bridge financing for developer Jim Kennelly’s luxury residential project at 303 East 51st Street, had it not been for Herrick’s bad advice about the zoning regulations for the planned 42-story tower, as The Real Deal previously reported.  [more]

The developers of a troubled Turtle Bay condominium tower filed a $100 million malpractice lawsuit against two high-powered law firms Cozen O’Connor and Blank Rome for allegedly giving them bad zoning advice prior to the fatal March 2008 crane collapse that killed seven people at the East 51st Street site.

The developers, led by former firefighter James Kennelly of Kennelly
Development, alleged in a suit filed June 13 in New York state Supreme
Court that their former zoning lawyers provided flawed legal opinions,
which led them to overestimate the value of the property, leading to the
eventual default of $70 million in loans with Arbor Realty Trust.

“Cozen and Blank Rome’s incorrect analysis of the applicable zoning
regulations and their failure to conduct sufficient and adequate due
diligence caused plaintiff to overestimate the value or potential value of
the project,” attorney Rex Whitehorn, representing Kennelly, wrote in
the complaint, “and plaintiff made irreversible decisions with respect to
financing while relying on plaintiff’s advice.”… [more]

City Point rendering and Aaron Malinsky

A federal grand jury handed down a new 11-count indictment in the state Sen. Carl Kruger ongoing bribery scandal charging the defendants, including real estate developer Aaron Malinsky and lobbyist Richard Lipsky, with conspiracy to commit mail and wire fraud.

Malinsky was previously indicted for allegedly making $500,000 in bribes to Kruger, a Democrat from Brooklyn, who later stepped in to help move forward several major real estate developments.

Lipsky, who represented various high-profile clients including Forest City Ratner, also allegedly paid off Kruger.

Malinsky, a principal at PA Associates, and Lipsky allegedly funneled hundreds of thousands of dollars in bribes to Kruger through a series of bank accounts set up by Manhattan gynecologist Michael Turano, who was Kruger’s long-time companion…. [more]

Admiral’s Row at the Brooklyn Navy Yard

The non-profit Brooklyn Navy Yard Development removed PA Associates as a designated developer on its high-profile Admiral’s Row project a day after one of the firm’s founders was charged in a $1 million federal bribery investigation.

The quasi-governmental entity today “terminated the designation of PA Admirals Row LLC as the developer of the Admiral’s Row site,” the corporation said in a statement to The Real Deal. PA Admirals Row LLC is an affiliate of Midtown-based PA Associates, which was approved as the developer to partner with grocery chain ShopRite on the $60 million project to build a grocery store.

Yesterday federal prosecutors charged Aaron Malinsky, a principal and founder of PA Associates, of funneling $472,500 in bribes to State Senator Carl Kruger…. [more]

[Updated 8:41 p.m.] The founder of a successful Midtown-based real estate firm is accused of funneling nearly $500,000 in alleged bribes to Brooklyn State Senator Carl Kruger, who in turn took action to benefit that company’s development projects, a complaint unsealed today in Manhattan federal court says. Prosecutors allege Aaron Malinsky, a principal with PA Associates, made the payments to an entity called Olympian Strategic Development, and that money was used to improperly benefit Kruger (see complaint after the jump). Kruger allegedly received at least $1 million in bribes from Malinsky and others between 2006 and 2011, investigators said. In addition to Malinsky, authorities accused lobbyist Richard Lipsky, a principal with Richard Lipsky Associates, whose clients include Forest City Ratner, of involvement in the alleged bribery schemes…. [more]

Three years after the Related Cos. began developing its 26-acre Hudson Yards project, the company is now trying to find a tenant willing to commit to occupying at least 600,000 square feet of office space, Crain’s reported. To land its key tenant, Related is offering either to construct a building and sell it to that company or to provide a big break on the rent. The 12 million-square-foot space, bordered by the High Line and the Hudson River, will run from 10th to 12th avenues and from West 30th to 33rd streets. The $15 billion project is expected to take as long as 15 years to complete, and will include three office buildings, nine residential towers with a total of 5,000 apartments, a mall, a school, a cultural center and 12 acres of open space…. [more]

Rector Place and Yair Levy

The Related Companies will take over the unsold units and commercial space at Yair Levy’s Rector Square condominium for $82.8 million next week, sources told Crain’s. Anglo Irish Bank, the project’s largest lender, took control of the property for the same price at a foreclosure auction in November in which Anglo, owed around $135 million, was the only bidder. Related has been widely expected to eventually take the reins as the company has been managing the Battery Park City property, at 225 Rector Place, under a receiver since last year…. [more]

Rector Square and Yair Levy

Anglo Irish Bank is scheduled to auction off Rector Square, the converted condominium building by developer Yair Levy, Nov. 17, after a state Supreme Court judge approved a final judgment last Thursday. Anglo Irish foreclosed on the Battery Park City building at 225 Rector Place after Levy defaulted on more than $117 million in loans in 2009. The building has operated under a receiver since March 2009, and industry experts… [more]

Related is seen as the likely buyer of the discounted apartments

Rector Square and Yair Levy

Anglo
Irish Bank plans to auction the unsold 230 apartments of Rector Square,
the foreclosed Battery Park City condominium conversion, in a bulk sale
in September, with s… [more]

Joseph Cayre and 452 Fifth Avenue (building photo source: PropertyShark)

The first major non-distressed office building sale Manhattan has seen in two years closed Tuesday, according to Globe St., with the $350 million sale-leaseback of the HSBC tower at 452 Fifth Avenue between 39th and 40th streets. The purchase was made by a special purpose vehicle known as 452 Fifth Owners LLC, which includes Joseph Cayre’s Midtown Holdings, Israeli-based Koor Industries, and Property and Building Ltd. Carl Schwartz, chair of law firm Herrick Feinstein’s commercial real estate department, said that the deal is a good omen for the market. “This transaction would be notable in any market, but represents a particularly good sign in light of the real estate world of 2010,” Schwartz said. “My sense is that there are lenders out there who want to put money out for the right deal.”