One Madison Park

Judge Kevin Gross, in an opinion released yesterday, said the case involving the luxury tower at 23 East 22nd Street, is placing an untold burden on his courtroom and cited an inability and unwillingness of the various parties to resolve several key disputes in the bankruptcy. The decision forces part of the case to start from scratch in New York state court after 1.5 years in bankruptcy court in Delaware.

“These adversary proceedings are extremely contentious and there is minimal cooperation among the parties,” Gross wrote in his opinion. “It’s fair to say the parties won’t agree on what day it is.” [more]

From left: Durst Fetner CEO Harold Fetner, developer Baruch Singer and 855 Sixth Avenue

A state court judge handed a victory to Durst Fetner Residential this week,
removing a nagging legal speed bump the developer was facing at its large
Herald Square site.

The legal cloud has hovered over the property at 855 Sixth Avenue since 2006,
when two real estate investors sued a group of developers led by Baruch Singer over a failed partnership bid to acquire a portion of the site.

Durst Fetner became involved in the dispute after it bought the defaulted note for about $104 million from iStar Financial and took title in December 2010 from owners Tessler Developments and the Chetrit Group.
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From left: Yair Levy, Rector Square (source: PropertyShark) and Attorney General Eric Schneiderman

A state Supreme Court judge has ordered developer Yair Levy to pay $7.4 million in restitution to the Rector Square condominium and permanently banned him from selling real estate in New York state.

Judge Joan Lobis found last month that Levy defrauded the Battery Park City condo conversion, spending millions of dollars in reserve fund money on illegal personal and general business expenses, including charge card accounts, mobile phone bills and writing checks to family members.

The judgment permanently bans Levy from selling condos or co-op projects in New York state, virtually ending a career lasting more than 30 years in the U.S. [more]

Steve Ross is the latest developer angling for a piece of One Madison Park, the skinny glass condo at 23 East 22nd Street that’s been mired in lawsuits since its owners ran out of cash in 2009. According to the Wall Street Journal, Ross’ Related Companies is working on a bid with Amalgamated Bank, one of the project’s junior lenders, to wrest control of the property through a buyout of senior lender iStar Financial’s debt. The Amalgamated plan was revealed in yet another lawsuit filed yesterday by Ziel Feldman’s HFZ Capital, which is expected to submit an official rescue plan for One Madison to federal bankruptcy court in Delaware within days. [more]

CIM principal and co-founder Richard Ressler, 47 East 34th Street (source: PropertyShark) and iStar CEO Jay Sugarman

Istar Financial has finalized a deal to sell the $84 million senior mortgage debt at 47 East 34th Street to CIM
Group, after the court issued a final judgment against the previous borrowers Esplanade Capital, according
to court records and financial documents obtained by The Real Deal.

Documents filed with the city Department of Finance on Wednesday show that CIM Group acquired the
loan from iStar on May 13, and court documents in Manhattan Supreme Court show that the Los Angeles-
based firm has filed documents to replace iStar as the plaintiff if the foreclosure case.

“My expectation is there will be an auction before the end of the summer,” said a source familiar with the
legal proceedings. [more]

From left: Esplanade’s David Scharf, iStar’s Jay Sugarman and 47 East 34th Street (building photo source: PropertyShark)

Esplanade Capital is in the final stages of a compromise deal to sell its embattled BridgeStreet hotel property at 47 East 34th Street, which iStar Financial foreclosed on in January.

Manhattan-based iStar, which in 2010 rejected offers of more than $60 million to buy out the debt on the property, would likely take a slight haircut to pay off $84 million in loans and other fees, sources said. The property is currently licensed to BridgeStreet, but sources said the building, located between Park and Madison avenues, could be used for condominium units or a combination of uses. “Working closely with iStar, which has been diligent and extremely cooperative, we are now near a resolution that should benefit all parties,” David Scharf, managing member of Esplanade, said in an e-mailed statement. [more]

Jay Sugarman, head of iStar, and 47 E. 34th St. (building photo: PropertyShark)

A state Supreme Court judge late last month handed a major victory to iStar Financial in the lender’s foreclosure case against Esplanade Capital’s 36-story mixed-use hotel at 47 East 34th Street.

Manhattan-based iStar filed to foreclose on the 36-story tower in March 2010 after the real estate developer defaulted on $76 million in loans.

Esplanade, led by investors David Scharf and Jay Eisenstadt, countersued later that month alleging that iStar launched the foreclosure suit as part of a “predatory” deal with Dublin-based Sorrento Asset Management to operate the property under the BridgeStreet Corporate Housing brand and cut Esplanade out of the picture. [more]

IStar Financial, the battered, Manhattan-based commercial property lender that’s been attempting to stave off a bankruptcy filing in recent years, may actually succeed. According to the Wall Street Journal, the company has already managed to unload several assets at decent prices and as a result, has slashed its debt level by $3.7 billion over the past 12 months. IStar, whose shares have bounced back from below $1 last February to $8.20 yesterday, still has to refinance $2.2 billion in debt that’s due in June, however, and analysts say that will be no small feat. [more]

Rodrigo Nino of Prodigy International and the William Beaver House

William Beaver House, the André Balazs-designed Financial District condominium that was just bailed out by the Los Angeles-based CIM Group, is going partially rental under its new ownership.

The 333-unit tower, which had been facing a foreclosure lawsuit prior to the takeover, was part of a three-piece deal in which CIM agreed to buy the debt on two troubled Sapir Organization buildings (Trump Soho and Beaver House) and take an equity stake in another (11 Madison Avenue), sources said. As the Wall Street Journal reported earlier today, CIM purchased the loan on over 200 unsold condos at the Beaver House and subsequently took ownership through a deed-in-lieu of foreclosure.
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As commercial real estate lender iStar Financial tries to restructure some of its $8.6 billion in debt, it may seek bankruptcy protection, after creditors blocked it from amending loans, company insiders told Bloomberg News. The company expects to meet with creditors next month to discuss a potential “pre-packaged bankruptcy,” which could occur sometime next year. New York-based iStar recently saw its shares plunge more than 25 percent, losing more than 90 percent of their value since 2007. The company, led by CEO Jay Sugarman, hired Lazard, and Kirkland & Ellis to advise them on the debt restructuring. Istar made loans on properties including the Trump Soho hotel-condominium in Lower Manhattan. Aside from bankruptcy, iStar is considering a proposal to extend maturities on its debt as well as a potential exchange offer, sources said. [Bloomberg via Crain's]

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