There’s no longer any mystery as to who owns the long-stalled concrete shell at 180 Ludlow Street on the Lower East Side. Curbed reported that BD Hotels, the team behind the Bowery and Jane hotels, among others, have picked up the property for $25 million. It was sold to BD by S&H Equities, a real estate development firm specializing in the Lower East Side that’s run by Serge Hoyda (note: correction appended). But at a community board meeting this spring, Hoyda said he was only in charge of construction and didn’t actually own the building. [more]

With fewer hotel rooms under construction, hotel developers hope the reduction in new rooms will help to revive the hospitality industry.

The October 2009 STR/TWR/Dodge Construction Pipeline Report noted that the total active U.S. hotel development pipeline includes 4,089 projects comprising 435,265 rooms.

This represents a 32.7 percent decrease in the number of rooms in the total active pipeline — which includes projects in the construction, final planning and planning stages, but not in the pre planning stage — compared to October 2008.

“The number of rooms in construction fell 41.2 percent from the same time last year,” said Duane Vinson, vice president at STR. A number of planned hotels have ground to a halt in Manhattan including the Lower East Side’s 180 Ludlow Street.
[more]

Stalled hotel project 180 Ludlow may soon breathe new life as a residential building, after Community Board 3 last night granted their tentative approval to the proposal laid out by lawyers for developer Serge Hoyda. The 158-unit building would be rent stabilized but would not have a major affordability component, which was a point of contention amongst board members. “There is an affordable housing crisis in this neighborhood,” said Joel Finegold, an affordable housing advocate. “People are being displaced on a massive scale. We’re all familiar with this, and this is an opportunity to create a tremendous number of affordable housing units.” Hoyda’s lawyers said financing for a residential building with an affordability component is not available in the current economic environment, and that instead, in an effort to partially satisfy that need, Hoyda will set aside five apartments in the building as a donation to the community. Other units will be mostly studios priced at $1,200 to $1,300 per month, though there will be some one- and two-bedroom apartments as well. The board will hold a final vote on the proposal next week, and while their approval is not necessary for the project to move forward, it will be instrumental in helping Hoyda obtain approval for the plan from the city’s Board of Standards and Appeals.

Yair Levy and Park Columbus condominium at 101 West 87th Street on the corner of Columbus Avenue

Garrison Special Opportunities Fund, a Manhattan-based hedge fund, alleges that developer Yair Levy threw his stalled Park Columbus condominium project at 101 West 87th Street into Chapter 11 the night before a scheduled Sept. 10 auction to foreclose on a defaulted $20 million mezzanine loan, according to a U.S. Bankruptcy Court filing obtained by The Real Deal. On Sept. 8, Levy filed to get a temporary restraining order in New York State Supreme Court blocking the foreclosure auction. Garrison officials allege in the filing that Levy failed to come up with a $20 million deposit the following day as demanded by Judge James Yates, in order to block the sale. After failing to produce the deposit, the filing alleges that Levy threw his YL West 87th Street Holdings entity into Chapter 11 bankruptcy, one night before the scheduled Sept. 10 auction. Garrison officials called the bankruptcy filing “a sham” and urged a U.S. Bankruptcy Court Judge to lift an automatic “stay,” allowing it to move forward with the foreclosure auction, which would effectively sell the stalled project to a new owner. [more]

From left: Kent Swig, Yair Levy, Serge Hoyda and Sheffield57

Following two months of legal challenges and financial turmoil,
Fortress Investment Group acquired the controversial Sheffield57
condominium for a mere $20 million during this morning’s foreclosure
auction. Fortress, a Manhattan-based hedge fund that previously acquired more
than $100 million in defaulted Sheffield loans, made the lone bid at
the auction, giving it total control over the 322 West 57th Street
holding company. Out of the few dozen attendees, there were only two
other registered bidders and neither made an offer for the building. The sale, arranged by Eastdil Secured and held at the Midtown offices
of Allen & Overy, the law firm representing Fortress, is considered
a minor miracle for developer Kent Swig, who struck a June agreement to
bring in the hedge fund as a white knight.  More

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Developer Kent Swig won a major legal challenge this morning as a state
Supreme Court judge denied a request by investors Yair Levy and Serge
Hoyda to question him under oath and to block the auction of the
Sheffield57 condominium. As part of a blockbuster suit filed in New York state Supreme Court,
Levy and Hoyda sought to block the Aug. 6 auction of Sheffield57,
arguing that Fortress Investment Group helped orchestrate a “loan to
own” scam with Swig’s lenders that would wipe out their stake in the
building. Fortress, a Manhattan-based hedge fund, acquired about $100 million in defaulted mortgage and mezzanine loans in June, which were used to convert Sheffield57 into a luxury condominium.   Comments

A New York State Supreme Court granted a $28.4 million judgment Friday
against developer Kent Swig after he defaulted on a personal loan from
a real estate investment firm led by investor Jeffrey Citrin for the
Sheffield57 condominium conversion. The case involved a $21.15 million personal loan that Swig took out in
July 2007 from the lender, Square Mile Structured Debt, to help fund
the conversion of Sheffield57, a luxury apartment building at 322 West
57th Street, which his company was converting from a rental tower. Swig had promised to convert the loan into an equity stake in
Sheffield57, but did not get an agreement from his lenders. Judge
Bernard Fried ruled that because it was a personal loan, Swig was still
on the hook for the money. “Furthermore, contrary to the defendant Swig’s assertion, the loan
agreement and note are instruments for the payment of money only,”
Fried wrote in his ruling. “This case does not involve a complex
financial transaction. The loan agreement establishes a discreet
obligation, and the note was, by its express terms, an absolute,
unconditional promise of payment by Swig.” [more]

A state Supreme Court judge rejected a request to appoint a receiver to
complete the Sheffield57 condominium conversion, a decision that could
help clear the way for Fortress Investment Group to foreclose on
millions of dollars in defaulted loans and take control of the property. Judge Bernard Fried ruled that Sheffield57 investors Yair Levy and
Serge Hoyda failed to prove that the condo was in imminent
danger of being lost or destroyed, despite their lawsuit accusing
developer Kent Swig of misappropriating millions of dollars in
construction funds. “Indeed plaintiffs here have not proven that the property at issue, unsold condominium units, will be removed, lost, injured or destroyed,” Fried wrote in his decision. “At best, plaintiffs have shown that the units are likely to be sold at a discount from their actual value. This
can be remedied by the payment of money damages.” [more]

Kent Swig, Yair Levy, Serge Hoyda

A state Supreme Court judge has agreed to hear arguments July 20 to block the auction of the Sheffield57’s senior mezzanine debt and force Fortress Investment Group and developer Kent Swig to answer questions under oath. Lawyers for Yair Levy and Serge Hoyda, the majority investors at the luxury condominium, asked Judge Bernard Fried to order an injunction blocking the auction, the release of all documents related to the loan agreement and the chance to depose Swig and Fortress about the terms of the debt sale. “He’s going to consider my request for expedited discovery,” said Stephen Meister, lead attorney for Levy and Hoyda. “There will be a hearing to determine whether to issue an injunction restraining [Fortress] from committing a [non-judicial] foreclosure sale.” Meister claims that the agreement between Swig and Fortress would allow the developer to retain some equity in the project, while wiping out the equity stake held by Levy and Hoyda, who own about 70 percent of the Sheffield57 condo. [more]

Just weeks after Fortress Investment Group filed to foreclose on a $70
million mezzanine loan at Sheffield57, a state Supreme Court judge is
set to hear arguments by investors Yair Levy and Serge Hoyda tomorrow
morning to appoint a receiver at the troubled condominium. In a June lawsuit, Levy and Hoyda alleged that developer Kent Swig
misappropriated more than $50 million in construction funds at
Sheffield57 and made critical decisions about the condo conversion
without their consent or approval. Levy and Hoyda, who control about 70 percent of the building ownership
[with Swig and other investors controlling the remaining interest],
claimed the foreclosure would wipe out their $17 million investment in
the building. [more]