From the January issue: For years, private equity firms have been lavished with huge sums of money by investors looking to own New York buildings. But recently, there have been fewer deals that those firms are finding attractive — ones that offer quick and bountiful yields. Plus, many so-called distressed opportunities that were supposed to materialize didn’t, as banks worked out new loan terms with their struggling borrowers.

As a result, many private equity firms’ buckets of cash have been sitting unspent. And, under typical investment rules, funds that are not deployed within three years must be returned to investors, without a hotel or condo or office tower to show for them. [more]

From left: Starwood Capital CEO Barry Sternlicht, RAL Companies CEO Robert Levine, Two Trees founder David Walentas and Brooklyn Bridge Park

Extell Development, Starwood Capital Group and Toll Brothers are just three of the seven high-profile developers vying to build a waterfront hotel and residential complex on Brooklyn Bridge Park, the Wall Street Journal reported.

The Brooklyn Bridge Park board will select among the three aforementioned proposals and ones submitted by Dumbo-based Two Trees, RAL Companies, SDS Procida and Dermot. The developers can build 170 to 225 hotel rooms and 150 to 180 residential units across two buildings no taller than 110 and 55 feet. [more]

Banks and private equity firms are eagerly throwing their hats in the ring for the approximately $9.5 billion U.S. real estate portfolio on offer from Anglo Irish Bank, the Wall Street Journal reported. The largest single commercial property loan sale since the start of the recession, complete with a number of troubled loans, the portfolio has attracted much attention from investors in distressed property.
By the deadline yesterday, Blackstone Group, Lone Star Funds, LNR Property, TPG Capital, Colony Capital, Area Property Partners, Starwood Capital Group, Five Mile Capital Partners and the CIM Group had all submitted or were intending to sumbit bids for at least some portion of the portfolio, sources said. The portfolio has also attracted the interest of banks, including Wells Fargo, JPMorgan Chase and Bank of America, given that there are three portfolios of loans that are performing and expected to mostly stay that way through maturity, the Journal said. [more]

From left: Steven Spinola, president of the REBNY; Eric Anton, executive managing director at Eastern Consolidated; Debra Shultz, managing director at Manhattan Mortgage; David Heiden, a principal at W Financial and Barry Sternlicht, chairman and CEO of Starwood Capital Group

As the debt ceiling debate nears a critical juncture in Washington D.C., real estate executives in New
York are concerned that absent a final resolution, the fragile recovery will be short circuited by a sudden
spike in interest rates.

Steven Spinola, president of the Real Estate Board of New York, the 12,000-member trade organization,
said the industry’s main concern is the impact a debt ceiling default could have on projects financed
with tax exempt bonds.

“If there is no agreement and our credit rating goes down, what will that do to interest rates?” Spinola
said. [more]

Starwood Capital Group, best known for its W Hotels brand, is planning to up its bid for bankrupt hotel chain Extended Stay, a lawyer for the company said in court. (Note: correction appended). Starwood had been previously outbid by a group of investors led by Centerbridge Partners and Paulson & Co. and joined yesterday by Blackstone Group, who offered $905 million for the 680-property chain. The offer is considered by the investors and by Extended Stay to be the stalking horse bid, meaning other offers would need to exceed it. Extended Stay filed the largest-ever bankruptcy in the hotel industry in June with $7.6 billion in debt. The deadline for proposals is May 17 and an auction is scheduled for May 27. [Bloomberg]

Private equity firm Blackstone Group is looking to buy a minority stake in Extended Stay, a now-distressed hotel chain it sold in 2007 for $8 billion, according to the Wall Street Journal. Blackstone’s approximately $100 million investment would be part of a larger, $905 million potential buy-up of the troubled hotel company, made by a group of investors led by Centerbridge Partners and Paulson & Co. The companies’ bid for the 680-property hotel chain, whose bankruptcy filing is the largest ever recorded in the hotel industry, is a direct challenge to a similar buy up proposed by Starwood Capital Group, the company whose hotel branch is best known for its line of W Hotels.

A massive U.S. commercial real estate crash is in its beginning stages, billionaire Wilbur Ross said today. The WL Ross & Co. CEO, who is also working on a government program to rid banks of their toxic assets, said he is practicing extreme caution on the commercial real estate investments front, especially with regard to office spaces, which are rapidly shedding tenants. Though the Public-Private Investment Program has made $1.5 billion in pooled government and private funds available to his company for purchasing banks’ distressed assets, Ross said he had used less than $100 million of those funds by Oct. 15, and that the money he spent went toward residential mortgage-backed securities rather than commercial properties. Earlier this month, WL Ross, along with several other firms led by Starwood Capital Group and TPG, agreed to buy $4.5 billion in real estate from the seized Corus Bankshares, after the bank’s investments in construction loans for condominiums went sour. [Bloomberg]