Steven Roth of Vornado, which just invested $116M in LNR

LNR Property, the commercial real estate company controlled by Cerberus Capital Management, has received a $417 million cash infusion from a group that includes Vornado Realty Trust, iStar Financial, Oaktree Capital Management and Cerberus, the company announced Friday. The new investments helped LNR, which is among the country’s largest servicers of commercial real estate loans, reduce its debt to $425 million from $1.3 billion. Steven Roth’s Vornado now has a 26.2 percent equity interest in LNR, which comes from a $116 million new cash investment, combined with a conversion of its $15 million mezzanine loan into equity, the New York-based REIT said. In a statement, LNR CEO Tom Hughes called the deal a “substantial new investment in LNR by our sponsor and four largest creditors” that will make LNR “well-positioned to capitalize on opportunities in the commercial real estate market.” TRD

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From left: 201 West 92nd Street, 200 West 93rd Street

Investor Mendel Mendlowits was allowed to regain control of his Upper
West Side rental complex after he refinanced the property in the middle
of a foreclosure suit from [more]

Tamir Sapir and the William Beaver House

Billionaire developer Tamir Sapir is facing a $130 million lawsuit from a fund controlled by the Blackstone Group, alleging he defaulted on a multi-million-dollar loan used to develop the William Beaver House condominium in the Financial District.

GSO Re Onshore, the fund managed by Blackstone subsidiary GSO Capital Partners, filed suit Monday against Sapir individually in New York State Supreme Court, seeking a judgment on the $66 million loan that he guaranteed and then failed to repay by the November 2009 maturity date.

“GSO RE would not have made the loan to SDS William Street absent Sapir’s personal and unconditional promise to repay the loan set forth in the guarantee,” wrote Kobre & Kim attorney Elizabeth Wolstein, who is representing the fund.

The lawsuit alleges that as of November 2009 Sapir owed $48.7 million in interest, on top of the $66 million in principal. Another $15.7 million in new interest is now due, resulting in the $130 million claim for summary judgment. [more]

One Madison Park, Ira Shapiro (top) and Jonathan Newman (bottom)

A state Supreme Court judge handed a victory to iStar Financial today by granting full authority to the interim receiver at the One Madison Park condominium, which is going through foreclosure proceedings. Judge James Yates ordered that attorney Jonathan Newman, who was appointed interim receiver earlier this month, be granted the authority to oversee the completion of One Madison Park. The move represents a significant setback to lead developer Ira Shapiro, who urged the judge to allow him to remain in control over the project, which descended into a bitter split with his development partner Marc Jacobs, and an investigation by the Rockland County District Attorney. “They’re no longer in control of the process,” said Matthew Parrott, attorney for iStar. “The custody and control of the building is in possession of Mr. Newman.” A written order is expected to be issued Monday, Parrott said. Burton Dorfman, the attorney for Shapiro, praised the judge’s ruling, and noted that the developer will still be involved with marketing and completing the 69-unit building in consultation with the receiver. Lawyers said that sales will not resume until Attorney General Andrew Cuomo’s office lifts the ban he imposed more than a month ago. On March 12, Cuomo ordered the developers to refund money to buyers after iStar filed to foreclose and dozens of lawsuits were filed claiming that the developers defaulted on tens of millions of dollars in personal loans used to fund overhead costs at the condo. [more]

Lender iStar Financial has told a state Supreme Court judge that it would fund the remaining construction at the One Madison Park condominium if the court-appointed receiver is granted expanded powers since it says the developer could not be trusted to complete the project. (Note: correction appended)

The remaining construction includes finishing the lobby, an indoor pool, fitness center, and other work to get temporary certificates of occupancy on the upper floors of the 50-story tower. The lender urged Judge James Yates to allow Jonathan Newman, the newly appointed interim receiver, additional powers to oversee the building amid concerns that the current developers, led by Slazer Enterprises president Ira Shapiro, have not fully accounted for millions in missing funds or resolved other problems. [more]

A state Supreme Court judge has named veteran real estate attorney Jonathan Newman as interim receiver of the controversial One Madison Park condominium, which is currently facing a foreclosure lawsuit by iStar Financial.

Newman, a partner at Newman Ferrara, was granted limited rights to oversee the project, including the collection of common charges and sales proceeds, however Judge James Yates allowed lead developer, Ira Shapiro, to continue sales at the 23 East 22nd Street property, at least until a number of legal issues are sorted out.

Yesterday’s move represents a partial victory for Shapiro, the president of Slazer Enterprises, who was facing allegations of forgery by his development partner Marc Jacobs and claims by the lender that millions of dollars in borrowed money was unaccounted for. [more]

A 16-unit luxury co-op building at 34 Leonard Street in Tribeca is hitting the auction block May 5, according to Crain’s, a year after developer R Squared defaulted on its $37.5 million mortgage and saw lender iStar Financial foreclose on the property. Although the property’s conversion to co-op was considered a success, the developers’ timing was off, placing the units on the market in fall 2007, just a short while before the recession hit. The R Squared development team has yet to comment on the auction proceedings.

Despite the all-time high delinquency rates seen among commercial mortgages, more lenders are showing optimism toward the commercial mortgage-backed securities market, and are gingerly buying up shares in the real estate investment trusts that own those loans, according to the Wall Street Journal. And their positive outlook might be justified — overall, REITs are up about 16.7 percent so far this year and some commercial-mortgage REITs, like iStar Financial and Arbor Realty Trust have made strides as well, up 140 percent and 113 percent so far this year, respectively, according to the Wall Street Journal. But Jason Yablon, a vice president with investment firm Cohen & Steers, said that the positive momentum needs to be taken with a grain of salt. “Because the stock has been beaten down, any incremental good news [about] the financing environment is going to make the stock move a lot,” Yablon said.

Lawyers for iStar Financial claim that the lender never received millions
of dollars from apartment sales prior to the foreclosure filing at One
Madison Park condominium, according to court documents obtained by The
Real Deal. Lawyers for iStar faced off against counsel for the developer in a March 23
hearing before state Supreme Court Judge Eileen Rakower, who heard
arguments about the lender’s request for a court-appointed receiver. Meister Seelig partner Stephen Meister, an attorney representing the developer, said he was not aware of any allegations of missing funds. “So many of them are completely baseless and untrue that it’s really not
a good idea to rely on these unsupported allegations,” Meister told The
Real Deal. [more]

47 East 34th Street and David Scharf (building photo source: PropertyShark)

IStar Financial is being sued for $150 million by Manhattan-based Esplanade Capital, which claims the lender conspired with another investment partner to foreclose on its 36-story mixed-use building and allow BridgeStreet Corporate Housing to operate the site as an extended-stay hotel under a separate deal.
The Manhattan-based lender previously filed suit to foreclose on $76.1 million in loans backed by the 110-unit building at 47 East 34th Street, which was being developed as an extended-stay property under the BridgeStreet name. Esplanade, operating through its 47 East 34 Partners affiliate, alleged that in 2007 it entered a deal with Istar to borrow $76.1 million in construction loans to develop the property. At the same time, it entered a “bulk-sale” agreement to sell the property for $96.7 million to one of its general partners, Dublin, Ireland-based Sorrento Asset Management. [more]