From left: Rector Square, YL Real Estate Developers’ Yair Levy and Justin Metz, a managing principal with Related Companies

[Updated: 11:53 a.m., Jan. 24, 2011] Related Cos. today closed the long-anticipated acquisition of Rector Square, the Battery Park City condominium that was foreclosed on by Anglo Irish Bank, for $82.8 million, The Real Deal has learned.
Anglo Irish bought the unsold shares of the condo at a November auction of the 304-unit building at 225 Rector Place for the same amount of money, and sold the property to Related, which had been managing the property for nearly one-and-a-half years after the lender filed to foreclose on former developer Yair Levy.

“Rector Square is an asset that we were very familiar with, having initially developed the property and later served as managing agent for the receiver,” said Justin Metz, managing principal at Related. “We look forward to bringing new resources to the development and maximizing value for both our partners and existing owners.” [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]

The Rushmore and Gary Barnett, head of Extell

In a last minute and stunning move, the developers of the Upper West Side’s Rushmore condominium filed a federal lawsuit yesterday against state Attorney General Andrew Cuomo seeking to reverse his April rescission order to refund more than $16 million in escrow funds to buyers.

The developers, Extell Development and Carlyle Realty Partners, operating under the name CRP/Extell, also filed a motion in U.S. District Court seeking a temporary restraining order that would block the release of the funds, which include down payments for more than $110 million worth of apartments.

The developers expanded on their previous claims by arguing that a drafting attorney committed a typo or “scrivener’s error,” and claimed that Cuomo’s office failed to allow them to collect evidence or cross-examine the condo buyers on their true motivations for filing the claims, which CRP/Extell claims were to negotiate lower prices in a down market. [more]

From the March issue: As developers of struggling new condos grow more desperate for cash, some may be pilfering funds from their own projects, industry insiders say. The reserve fund — a sort of rainy day fund for capital improvements at condo conversions — is particularly vulnerable because developers have easy access to it, experts said. Former Sheffield57 developer Kent Swig and Rector Square’s Yair Levy are the most high-profile examples of sponsors who’ve been accused of depleting these funds. But attorneys and other sources say many more developers are likely misappropriating funds, using residents’ money to pay their bills and falsely inflating costs. [more]

From left: Attorney General Andrew Cuomo, Secretary of Housing and Urban Development Shaun Donovan and the Rushmore

The U.S. Department of Housing and Urban Development has launched an investigation into the Rushmore condominium, amid allegations that the lawyers for the developer, Extell Development, held previously undisclosed meetings with state Attorney General Andrew Cuomo’s office to prevent existing buyers from backing out of their apartment contracts.

HUD officials said that as of May 11, 2009, Extell “voluntarily suspended” the building’s registration under the Interstate Land Sales Full Disclosure Act (ILSA), a federal law that protects consumers in newly constructed condos with more than 99 units. The move would allegedly be a way for the developer to shield itself from ILSA-related claims.

HUD opened the probe after media reports mentioned that 34 buyers filed complaints with the AG’s office. While officials did not disclose why Extell would suspend, documents obtained by The Real Deal show the Rushmore developer was facing an ILSA-based lawsuit prior to the filing. [more]

From left: Yair Levy, Michael Shvo, and Rector Square at 225 Rector Place

A group of 45 unit owners at Rector Square condominium in Battery Park filed a $100 million lawsuit against developer Yair Levy, superbroker Michael Shvo and building manager Cooper Square Realty, alleging widespread fraud, negligence and misrepresentation. According to the suit filed yesterday in New York State Supreme Court, Levy, the owner of YL Real Estate Developers, defaulted on the mortgage loan with Anglo Irish Bank, failed to complete construction of the building, converted reserve funds for his own use and failed to make PILOT payments to the Battery Park City Authority. The plaintiffs claim the sponsor and broker misrepresented the quality of the building to potential purchasers. “Instead of a building of their dreams they bought into a building of nightmares,” said Marc Held, attorney for the unit owners. Levy also allegedly sold a block of 15 apartments to an Italian university for use as dorm rooms for exchange students and rented out apartments to Marriott for use as extended-stay hotels, violating local zoning laws. [more]

Already battling at least 34 buyers trying to back out of their sales contracts, Extell Development is facing a lawsuit from a Wall Street executive claiming that the Rushmore condominium tried to defraud her of her $1 million-plus deposit refund, and failed to obtain key city approvals. Kelly Coffey, a managing director at JPMorgan Chase, filed suit in New York State Supreme Court Sept. 29, alleging the Upper West Side building’s sponsor missed the Sept. 1, 2008 closing deadline by five months, and then illegally amended the offering plan to deny buyers the right to get a refund. “Instead of offering the plaintiff the right to rescind the agreement, as required by the offering plan, the defendant sponsor’s 16th amendment to the offering plan states that purchasers have no right of rescission related to the first closing,” attorneys Philip Hines and Marc Held wrote in the complaint. [more]

 Units at Rector Square allegedly available per night and for students

Nearly a year after gaining regulatory approval, Rector Square
developer Yair Levy failed to disclose the building’s financial records
to buyers at the troubled condominium, offered vacant apartments for
extended-stay hotel guests and sold at least 10 apartments for use as
college dorm rooms, according to attorneys and complaints filed with
state Attorney General Andrew Cuomo. Anglo Irish Bank filed suit in New York State Supreme Court earlier
this month to foreclose on the 304-unit building after Levy defaulted
on a $165 million loan to the lender, on payments to the Battery Park
City Authority and failed to meet construction deadlines. [more]