The past year has seen a seismic upheaval of wealth. Billions of dollars evaporated during the financial crisis, and much of what’s left is changing hands at a breathtaking clip. Developer Kent Swig — the once-moneyed son of a real estate dynasty — warned, for example, that he may soon file for personal bankruptcy protection now that his beleaguered Sheffield57 condo development has been sold at a foreclosure auction to hedge fund Fortress Investment Group. Former Lehman Brothers CEO Dick Fuld, who watched his net worth all but disappear in the last months of the company’s existence, sold his 16-room Park Avenue co-op for $25.87 million in late August. [more]
-
-
As the real estate industry scrambles to unwind billions of dollars in
distressed inventory, a number of high-profile deals are stuck in
neutral as lenders battle it out with each other to see who will get
paid and who will be left holding the (empty) bag. While creditors often turn on each other during a workout, the massive
number of securitized loans with multiple lenders and third-party
servicing firms managing the funds is creating a level of complexity
that may take years to sort out, analysts said. Unlike the previous downturn in the 1990s, the majority of large deals
during the recent real estate boom were made using securitized loans –
or at least loans with large syndicates, or groups of lenders sharing
the burden of a single loan. [more] -
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Two contiguous, six-story mixed-use buildings at 1041 and 1057 St.
Nicholas Avenue are on the market with an asking price of $14.9
million. The elevator buildings contain 113 residential units and 14
stores, with a combined frontage of 253 feet on St. Nicholas Avenue
from 162nd to 163rd streets. The asking price for the
109,377-square-foot property represents a price per square foot of
$136, a capitalization rate of 5.5 percent and a gross rent multiple of
8.41. Robert Shapiro, Thomas Donovan and Robert Knakal of Massey Knakal
are marketing the properties. CommentsNew York City is at a peculiar crossroads. For months, investors have
marshaled unprecedented amounts of capital, salivating at the prospect
of snapping up distressed properties. “We’re fortunate this cycle to
have the most dry powder in our
history,” Blackstone Group president Tony James said last month at the
Barclays Capital Global Financial Services Conference, which was held
in Manhattan. The firm has about $28 billion in unspent capital, he
said. About $12 billion of that is earmarked for real estate. “We’re
just beginning what will be the best period in decades for private
investing,” he said. Dan Fasulo, a managing director at Real Capital
Analytics, estimated
that $50 billion has been raised and is ready to be deployed into
distressed real estate. Paradoxically, investors have found very little
worth buying so far, in large part because banks continue to hold
troubled loans on their books, hoping conditions will improve. [more]Keeping heads in beds has not been easy for New York City’s hotel
industry in this economy. Not only are tourists cutting back on
expenses, but companies — including those that not too long ago
readily put up their employees at five-star hotels — are also
massively scaling back.
In this month’s Q & A, hotel experts and operators talked to The Real Deal about why the hospitality industry has fallen further here than it has nationally.
They said revenue per room, or RevPAR, is down between 20 and 30
percent and that the luxury hotel market (not surprisingly) is getting
crushed hardest.
[more]As if today’s leasing market wasn’t challenging enough, New York’s
commercial real estate brokers have one more thing to contend with:
demanding landlords. Whether it is an increase in the number of phone calls, requests for
weekly face-to-face meetings, or a sudden mandate of updated daily
reports on individual properties, all over town there are more stories
of landlords who now want up-to-the-minute information on what their
respective brokers are doing to fill their space. And in some quarters, this newfound neediness is starting to grate. “It’s a pain in the ass,” said a broker at one of the top firms who
asked to remain anonymous. “Landlords are micromanaging the process and
you need a lot of handholding and a lot of paper. [more]On paper, at least, the Flatiron District would appear to possess all
the trappings of a bustling, mixed-use area for commercial real estate:
Centrally located (check); moderately priced (check); good restaurants
and sophisticated architecture (check and check). But at just over 19 percent, the district also boasts one of the
highest office availability rates (which measures the percentage of
space that is available for lease, or will be available within the next
12 months) in Manhattan. And real estate experts are grasping for
explanations. According to a report by the commercial brokerage CB Richard Ellis, the
availability rate in the Flatiron District climbed 0.2 points in August
to 19.3 percent. In comparison, the neighboring districts of Chelsea
and Union Square had rates of just 11.6 percent and 10 percent. [more]
Despite new glimmers of hope for landlords battered by months of bad
news, tenants with good credit remain firmly in control of the
Manhattan office leasing market, brokers said. Steadier leasing volume, declines in availability rates and even
increases in asking rents for some segments of the market might appear
to strengthen the building owner’s hand, but brokers said there is
still too much product, and too few tenants. “It has improved [for the owners] in the sense that there may be more
activity,” said David Lebenstein, senior managing director for Colliers
ABR. “[Landlords] may be lucky in some cases. They may have more than
one option. But we see plenty of situations where the tenant is the
only game in town.” [more]Like a vertical ghost town, 11 Times Square, the city’s largest
speculative office tower, remains entirely unleased more than two years
after breaking ground in the summer of 2007. Some experts give the owners — a partnership between developer SJP
Properties and a fund managed by Prudential Real Estate Investors
called PRISA — little chance of holding on to the 1
million-square-foot building without a significant debt restructuring,
if at all. They cite the current weak economy, the 25 percent decline in rents,
and the cost of the building, a pricey $1,100 per square foot. Those affiliated with the building, which is located at 640 Eighth
Avenue between 41st and 42nd streets, have put on a brave face,
however. They say there is a great deal of activity at 11 Times Square,
which is being marketed by commercial brokerage CB Richard Ellis.
[more]When the buyer of a new development condo on the Upper West Side broke
his sales contract last spring, he didn’t regret forfeiting the
$250,000 deposit. By his estimate, the $2.5 million condo had lost far
more of its value — some $800,000 — since he agreed to purchase it. “He thought, ‘I’m losing less money walking away from my contract
deposit. I’m not going to throw good money after bad,’” said Steven
Sladkus, a partner at law firm Wolf Haldenstein Adler Freeman &
Herz, and the buyer’s attorney. So Sladkus was surprised to get a call from the buyer a few weeks ago
asking if the sponsor would sell him the unit after all — for the
right price. [more]The ranks of Manhattan’s super-high-end listings may have shrunk over
the past year, but the city still boasts a number of properties with
sales prices north of $30 million. It’s no surprise that few of these mega-listings have traded in the
last year, with the global financial crisis paralyzing potential
buyers. But now, very high-end listings are beginning to generate
interest again, albeit at smaller price tags. (Case in point: Madonna’s
new $32.5 million Upper East Side townhouse, originally listed for $42
million in October of 2008). This month, The Real Deal looked at five of the city’s
priciest listings — some new, others market fixtures — along with
other noteworthy properties generating buzz this fall. [more]With the combination of high building vacancy rates and the down
market, Roberto Gonzalez, an agent at Bond New York, expected to see a
wave of tenants erecting walls and “cramming” into apartments to save
rent money. But the expected flood of people seeking to pile into shares hasn’t
really arrived, he said. “Everything in my gut tells me there should be
tons of people sharing, but there are actually fewer,” said Gonzalez,
who has rentals in Tribeca, the East Village and Williamsburg. Brokers who deal with areas of Manhattan where there are a high
percentage of shares — such as the Financial District, Murray Hill and
Union Square — said that while landlords may be more apt to allow
tripling and quadrupling up just to get an apartment full, that there
hasn’t been a huge surge. [more]Manhattan
Chelsea
$833,000
356 West 23rd Street
2-bathroom, 1,000 sf loft co-op unit in pre-war building; unit has wood-burning fireplace, terrace, washer/dryer, garden view; pets allowed in building, walk-up; maintenance $1,200; last listing price $895,000; 343 days on the market. (Brokers: Alexander deBordes, Eychner Associates; Corey Wecler, City Connections Realty)Financial District
$872,000
20 Pine Street
3-room, 1,221 sf condo loft; apartment features home office, separate alcove space, ebony-stained hardwood floors, spa-like bath; building includes library lounge, pool, Turkish Hammam spa treatment rooms, golf simulation room, billiards room, club lounge with health bar, terrace lounge on the 25th floor; common charges $1,135; taxes $0 (abated); asking price $1.07 million; 10 weeks on the market. (Broker: Ariel Cohen, Prudential Douglas Elliman)Greenwich Village
$900,000
40 East 9th Street
2-bedroom, 1-bath, 1,050 sf co-op in postwar elevator building; unit has hardwood floors, through-wall a/c, oversize balcony, southern exposure facing the city; building features 24-hour doorman, laundry; maintenance $1,450, 56 percent tax-deductible; asking price $975,000; nine weeks on the market. (Brokers: Robert Rosa, Century 21 NY Metro; Brian Babst, the Corcoran Group)Midtown East
$905,000
300 East 59th Street
1-bedroom, 1-bath, 1,000 sf sponsor unit in postwar elevator co-op building (The Landmark); 24-hour doorman/concierge, elevator, roof deck; unit has hardwood floors, renovated bath, eastern exposure and views of the Hudson River; maintenance $1,766; 68 percent tax-deductible; asking price $945,000; two weeks on the market. (Brokers: Jen Lee, Lisa Lee, Century 21 NY Metro; Linda Gottlieb, Prudential Douglas Elliman)Upper East Side
$1.05 million
75 East End Avenue
2-bedroom, 2-bathroom, 1,350 sf co-op; unit has both renovated kitchen and renovated bathroom; building has 24-hour doorman, concierge, health club, storage facilities; maintenance $1,900 per month, 45 percent tax deductible; asking price $1.1 million; 24 weeks on the market. (Brokers: Jeff Tenenbaum, Barak Realty; Valerie Portny, Prudential Douglas Elliman)Upper East Side
$3.3 million
181 East 90th Street
3-bedroom, 3-bath, 2,319 sf condo; corner unit features views north, west and east, oversize double-pane windows, sound-insulated hardwood floors, full-size washer/dryer, custom California Closets, chef’s gourmet windowed eat-in kitchen, wine refrigerator, custom cherrywood cabinets and granite countertops, marble bathrooms; building features 24-hour doorman/concierge, full-time handyman, on-site fitness center with no additional charge, children’s playroom, storage; common charges $2,068; taxes $515 per month (abated until 2014); asking price $3.6 million; two weeks on the market, purchased after one day of showing. (Brokers: Ellen Freeman, Karin Posvar-Picket, the Corcoran Group)Queens
Bayside
$167,000
69-25 213 Street
1-bedroom, 1-bathroom, 650 sf unit in co-op building (Hollis Court); apartment features renovated bathroom, updated kitchen with granite countertop, hardwood floors; maintenance $432; last listing price $169,000; four days on the market. (Broker: Carollo Real Estate)They’re known as “dog” lines: the vertical row of apartments in a condo
building that are hardest to sell. They may lack a view, be oddly laid
out, or be smaller than their neighboring units down the hall. While dog lines tend to sell last in any market, they can be
especially difficult for developers to deal with in a downturn like
this one. David Sigman, a senior vice president and principal with the
development group LCOR Incorporated, which has several New York
projects, said that developers may be particularly vulnerable to dog
lines if they negotiated minimum sales prices with their lender and the
offers for apartments are coming in below that amount. [more]Few buyers who bought fancy condos in the last few years could have
predicted that their building would end up as a poster child for the
failed real estate market in the city. But at some buildings that’s
exactly what’s happened. Satian Pengsathapon, who is 30 and works in the advertising industry,
purchased a unit in the Forté tower partly because he liked that the
well-known architecture firm FXFowle designed the building. And having
gone to school at the nearby Pratt Institute, he was also a fan of the
neighborhood, Fort Greene. “I haven’t had buyer’s remorse,” Pengsathapon said. “If anything, I wonder why people aren’t buying in this building.” [more]A new four-story building at 11-42 31st Avenue in Astoria has opened for sales. Development group
Eleven-Forty-Two LLC built the property, which is being marketed by
aptsandlofts.com. Prices for units in the building, which sits just
half a block from the East River, range from $365,000 to $569,000. CommentsBack in 2006, when Glenwood Management began assembling parcels on the
eastern edge of the then newly rezoned Hudson Yards district to make
way for Emerald Green, it knew the project would have plenty of company
when it opened. Thousands of high-end apartments in several massive
rental projects were slated to hit the market in the emerging
neighborhood at the same time or soon after. What they didn’t anticipate was the mess of a market they’d be entering. The 24-story, two-tower building, located at 320 West 38th Street, has
just begun renting its 569 apartments, not long after the release of a
quarterly market survey declaring the past year a disaster for rentals.
[more]Its staggering decade-long, rags-to-riches rise made a revitalized
Harlem the media superstar of the Manhattan real estate boom. Which makes its steep fall all the more tragic. According to data from
Miller Samuel, Harlem saw only 83 co-op and condo sales in the first
two quarters of 2009, a more than 51 percent plunge compared to the 171
sales from the same time last year. But at least one bold and unique new project is coming to market and
could be a new bellwether for future residential activity there. Indeed, strong sales at PS90 Condominiums — a $40 million conversion
of a century-old public school that just opened its sales office last
month — could be an important boost for the Harlem market. [more]A downtown Atlanta office building housing a Department of Housing and
Urban Development office sold for $7 million at a foreclosure auction
in early September, the Atlanta Journal-Constitution reported. Richard
Bowers & Company, the commercial real estate firm that controlled
the Five Points Plaza building, had to sell it at auction when an
attempt to refinance failed. A $13.4 million loan on the building came
due in July. The lender, an REMIC trust, placed the winning bid at the
auction. HUD is the only tenant of the 17-story building.
CommentsSince 1986, Steven Spinola has been the president of the Real Estate Board of New York, a 12,000-member trade association that represents the industry before numerous legislative and regulatory bodies. Earlier this year, REBNY lobbied in Washington for the first-time homebuyer tax credit, and was instrumental in defeating a proposed state tax on capital improvements for property. The organization, which helped push for luxury decontrol of rent-stabilized apartments in the past, this year has lobbied against proposals to extend the reach of rent regulations. [more]
Despite its prime waterfront location and its disproportionate amount
of cutting-edge “green” architecture, Battery Park City is getting
slammed by the downturn more than many other Manhattan neighborhoods. Stephen and Mary Lacoff, for instance, have been trying to sell their
1,158-square-foot two-bedroom at 2 South End Avenue for more than a
year now. Despite dropping the asking price from $1.385 million to
$999,000, they’ve received no offers. The apartment — which, like everything in Battery Park City, is in a
land-lease building — has some of the higher ground rents in the area,
contributing to common charges of $2,003 a month, or $1.74 a square
foot. “There has been some intermittent interest, but no offers,”
Stephen Lacoff said. “What I’m taking from that is there’s not a huge
demand.” [more]If imitation is flattery, as the saying goes, Soho, the downtown
Manhattan neighborhood that gets its name from its location “South of
Houston Street,” has admirers far and wide. Indeed, many once-derelict industrial sections of U.S. cities, where
warehouses have given way to loft-style apartments, now boast similarly
styled names melded from the landmark points that make up their
location, whether San Francisco’s SoMa (“South of Market Street”) or
Denver’s LoDo (“Lower Downtown”). But buyers, particularly out of towners, haven’t forgotten the
original, which has fared better than other upscale parts of Manhattan
during the real estate downturn. [more]New condos — the black sheep of the real estate industry for much of 2009 — are finally beginning to move again as construction progresses and developers find ways to circumvent stiff presale requirements for mortgages. For example, the Tempo condominium in Gramercy, which sat virtually buyerless for months after it went on sale in September 2008, sold 10 units this summer. In Lower Manhattan, District on Fulton Street sold 10 units in August alone. [more]
The House passed legislation last month to extend the Federal Housing
Administration’s ability to guarantee loans, particularly in large,
urban areas. Rep. Anthony Weiner of Brooklyn and Queens served as a
co-sponsor on the legislation, which will raise the price limit on
FHA-eligible loans for developments to $377,000 per unit, up from
$184,000 per unit, and will raise the loan limits on high-rise elevator
buildings up to 50 percent, from 10 percent. Weiner’s office estimated
that the legislation will free up credit for the construction of 11,000
apartment units nationwide, including 2,088 in New York City.
CommentsFor nearly five years, the retail stores at the ferry terminal in
Staten Island have sat mostly empty as thousands of commuters have
swarmed by waiting around for the boat to Manhattan — the perfect
captive shopping crowd. But with several leases signed and final discussions underway with
national restaurant retailers, the St. George Ferry Terminal — a
roughly 20,000-square-foot space that has caused headaches for the city
since a $300 million-plus renovation project was completed in 2005 –
appears poised to finally come to life. Officials at the city’s Economic Development Corporation, which took
control of leasing the property late last year, say they expect at
least two food retailers to move into vacant retail spaces by the end
of 2009. [more]Like a truly recession-weary New Yorker, this year restaurant mogul
Steve Hanson has opted to swap foie gras for burgers and fries. In January, Hanson, founder of the B.R. Guest restaurant empire,
stunned foodies by shutting down his three-star Italian gem Fiamma, a
Soho spot famous for its $92 prix fixe menu laden with indulgent foods
like foie gras and quail eggs. In published reports, Hanson blamed the recession’s decimation of Wall Streeters’ dining dollars. Now he’s firing up the grill for a far more modest American culinary staple: burgers. Hanson has leased the former home of barbeque joint the Hog Pit at 22
Ninth Avenue at 13th Street in the Meatpacking District for Bill’s Bar
& Burger. It’s slated to open later this month, serving up turkey
burgers and perhaps even spiked milkshakes. [more]Fifth Avenue in the 40s is in retail flux. Nearly a dozen spaces on the
10-block stretch are vacant or on the market, including the former
Circuit City store and the former indoor mall at 575 Fifth Avenue and
47th Street. Meanwhile, new tenants like LittleMissMatched, the upscale
children’s apparel store, have recently entered the area. The strip includes the gateway to the Diamond District, along with the
eastern edge of Rockefeller Center, and is dotted with camera and
souvenir shops, as well as low-end food merchants. It has long been the
dowdy stepsister to Fifth Avenue in the 50s, which is lined with tony
tenants such as Saks Fifth Avenue, Tiffany and Bergdorf Goodman. But in recent years, the stretch started attracting higher-end retail
tenants, such as American Girl Place, Build-A-Bear and Aldo, the shoe
store. In fact, many expected it to keep getting fancier. CommentsWill Congress extend the wildly popular $8,000 homebuyer tax credit beyond its Dec. 1 expiration date? That’s a question generating huge pressure on Capitol Hill, from
would-be buyers who haven’t found the right house to realty agents,
builders, lenders and squads of lobbyists working on their behalf. But here’s the first hint of an answer: On Sept. 17, the leadership of
Congress’ primary tax legislative committee introduced a tax credit
bill that’s likely to zip through the House and move to the Senate
rapidly. Charles Rangel, chairman of the House Ways and Means
Committee, sponsored the bipartisan Service Members Homeownership Tax
Act, which would extend the credit for another 12 months for thousands
of military, Foreign Service and intelligence agency personnel who’ve
been posted abroad during 2009.
[more]Imagine, just a few years ago, public pension funds were among the
major beneficiaries of the record sales of commercial and residential
real estate. In 2007, some of the nation’s largest pension funds
amassed record profits for the sale of assets in New York City. But
time changes all things, including record profits. In that vein, I’ve
decided to examine some of the profits, and possible losses, from these
investments. The New York City Employees Retirement System (NYCERS) and the New York
State Common Retirement System (in joint venture, and as an investor
with real estate funds), invested in New York City real estate. NYCERS
has invested in real estate projects through joint ventures with real
estate owners, developers and fund managers. [more]Who is more likely to walk away from a house and a mortgage — a person
with super-prime credit scores or someone with lower scores? Hint: It’s probably not who you think. New research using a massive
sample of 24 million individual credit files has found that homeowners
with high scores when they apply for a loan are 50 percent more likely
to “strategically default” — abruptly and intentionally pull the plug
and abandon the mortgage — compared to lower-scoring mortgage
borrowers. Experian, one of the three national credit bureaus, teamed with
consulting company Oliver Wyman to identify the characteristics and
debt management behavior of the growing numbers of homeowners who bail
out of their mortgages with none of the expected early warning signs,
such as nonpayments. [more]A few months ago, a demolition company quietly went to work on the Holy
Trinity Chapel at 58 Washington Square South. As this unloved,
unlamented and perhaps even unremembered Modernist building disappears
without a trace, an entirely new project is about to break ground, to
be completed in 2012. I confess that I have not been so gladdened by the disappearance of any
building in Manhattan since 2000, when I witnessed the razing of the
Coliseum at Columbus Circle, to make way for the incomparably better
Time Warner Center. As for the Landmarks Commission or the Greenwich
Village Society for Historic Preservation, if they had any compunctions
whatsoever, I certainly didn’t hear about them.
[more]After nearly a full decade of real estate boom, the luxury market in
Tuscany is sliding downward. Overall prices have fallen 10 to 20
percent over the past two years, according to brokers who work in the
region, though the dip is still less than in France or Spain. In the
Chianti countryside, prices for some rural properties have fallen to as
low as half of what they were five years ago, according to the
International Herald Tribune. It is the first major decline since the
euro doubled the cost of property roughly ten years ago
CommentsResidential
Barak Realty
Chris Pratt joined the company as a sales associate.City Connections Realty
Catherine Cleland joined the company as an associate broker. She was previously a senior associate broker with Citi Habitats.The Corcoran Group
Richard Oceguera joined the firm as a salesperson.DJK Residential
Cindy Kaneda joined the company as a sales agent.Prudential Douglas Elliman
The company expanded its 90 Hudson Street office with the addition of 10 new agents: Armanda Squadrilli, Yocari Lara, Monica Novo, Anthony Brown, Carol Landon, Diane Nichols, Levi Stoneking, Sophie Eustache, Justin Siegel and Barbara Braathen. Carl Ekroth left Elliman’s Sukenik Group to work independently at the company.Union Square Mortgage Group
Charles Pettid joined the company as vice president of business development.Weichert Realtors, Mazzeo Agency
Monte Brown and Dellmen Hecht joined the company.Commercial
The Clarett Group
Annu Chopra was promoted to managing director.Colliers ABR
Eric Mockler joined the company as a senior managing director. He was previously a vice president and general manager at Johnson Controls Inc.Cresa Partners
Gerard Picco joined the company’s New York office as senior vice president. He was previously regional managing director at Mohr Partners.Grubb & Ellis
Charles Kingsley, Jon Epstein and Yoav Oelsner joined the company. They were previously at Cushman & Wakefield.Hines
Jim Gutmann was promoted to vice president of construction from construction manager.Square Foot Realty
Candice Delevante joined the company as a director. She was previously director of retail leasing for NY Space.Tudor Realty Services
Andrew Lazarus joined the company as senior vice president. He was previously director of leasing at Macklowe Properties.Winoker Realty
Evan Lieberman joined the company as a managing director. He was previously with Empire NYC. Howard Epstein and Alex Fazio joined as associate directors. Epstein was previously director of commercial leasing at Hercules Realty Group. Fazio previously worked in the financial sponsors group at UBS.Compiled by Linden Lim
Brown Harris Stevens’ President of Project Marketing has always had her
own company, Nancy Packes Inc., for rentals, and she is now expanding
the company into new development sales with a new hire. “The whole intent [in my contract at BHS] was to give them a division
for new development marketing,” Nancy Packes said. “We always
understood the contract had a sunset date and we both knew what the
intent was.” That “sunset date” was June 30, when Packes’s non-compete clause with
BHS expired, though contracts she signed through BHS will remain there
“through the life of the project,” she said. Packes has hired Prudential Douglas Elliman broker Rick Rosa as executive vice president and head of the Rosa Group. [more]Core has acquired boutique brokerage Garr & Company and several of
its listings, according to Core founder and CEO Shaun Osher, bringing
on board the company’s president, Michael Garr. “[Garr] is bringing a
wealth of experience, having worked at one of the top companies in the
city for a while … as well as being one of the top brokers in Chelsea.
It’s a perfect fit,” Osher said. “He has an incredible, impeccable
reputation.” Garr’s company had three other employees, according to the
company’s Web site, but Osher said only Garr moved to Core. The acquisition officially occurred Sept. 1. [more]Looking for an alternative to Craigslist? Two entrepreneurs have
launched a Web site to connect potential renters with brokers. Shankar
Desai and Peter Treadway, who met in elementary school, launched
Nakedapartments.com to provide a way for brokers to pursue renters
whose incomes and needs match the brokers’ listings. “We came up with a solution that actually provides value for both
groups [brokers and renters],” Desai said. “We see ourselves as a
facilitator for these two groups to more efficiently connect.” As of mid-September, 168 renters and 54 brokers from a range of firms had registered for the site. [more]
Riverton appraised at less than half the value of loan
The Riverton Houses apartment complex in Harlem was reappraised at $108 million, less than half the value of its $225 million mortgage, according to a report last month from commercial mortgage tracking firm Trepp.The property has now lost 68 percent of its value compared to its appraisal value of $340 million in January 2007, according to a source.
The most recent prior appraisal put the value of the property at $52 million below the loan value, or about $173 million, Trepp data indicates.
The complex of 1,230 apartments between 135th and 139th streets and Fifth Avenue and the Harlem River is owned by Stellar Management, which defaulted on the loan, and is in foreclosure. Stellar purchased Riverton for $131 million in August 2005, with a $105 million loan and $26 million in equity.
“The loan that served as the canary in the coal mine for [commercial mortgage-backed securities] is back in the news today,” Manus Clancy, Trepp managing partner, said in a report to clients.
“A new appraisal reduction was placed on the property [this past month], and the new number implies a potential loss of over half the value of the loan,” Clancy wrote. By Adam Pincus
Spanish investor pays $1,700 per square foot in Flatiron District
Developer Joseph Sitt’s Thor Equities sold an ornate, cast-iron Flatiron District commercial property at 901 Broadway for $24.6 million to a Spanish businessman who paid all cash on the deal recently, a broker on the sale said.The 14,336-square-foot building sold for a jaw-dropping $1,715 per square foot.
The five-story building at the corner of Broadway and 20th Street, originally the home of retailer Lord & Taylor Dry Goods Store, was built in 1867, and is fully leased except for the fifth floor, sales broker Robert Knakal, chairman of brokerage Massey Knakal Realty Services, said. He said that the sale closed Aug. 27.
He noted of the price: “It is a very positive sign for the marketplace, which is in need of positive signs.”
The all-cash Spanish buyer, who Knakal said described himself as an “industrialist,” had real estate holdings in his native country but none in New York City, making him part of a trend.
“We have not seen such an influx of foreign buyers since the mid-1980s,” Knakal said.
His firm recently sold 115 West 57th Street to a Japanese investor for $5.8 million in cash, and has three more deals worth $27 million in contract, he said.
Thor Equities bought the building in 2006 for $17.375 million, city property records show. The company did not immediately respond to a request for comment. By Adam Pincus
Boymelgreen’s Novo condo sells out after three years on market
Embattled developer Shaya Boymelgreen has at least one piece of good news. Boymelgreen’s Novo, a 113-unit condo on Brooklyn’s Fourth Avenue, sold out after nearly three years on the market, with the last unit scheduled to close last month, according to Corcoran Sunshine Marketing Group, which exclusively handled sales at the project.The condo, which encountered resistance from the community after using a local park for construction staging for the building, began sales in March 2007.
Meanwhile, development along Fourth Avenue, once billed as the next frontier of gentrification in Brooklyn, has slowed amidst the real estate slump.
Novo, at 343 Fourth Avenue between the neighborhoods of Park Slope and Gowanus, had closed around 70 percent of its units by the time the Lehman Brothers collapse occurred in September 2008, so it didn’t have to contend with stiff presale requirements now in place from Fannie Mae, according to Gordon Hoppe, a senior vice president and director of sales at Corcoran Sunshine. Financing for buyers in the building “wasn’t an issue,” Hoppe said. According to Streeteasy.com, the average price of units sold in the building was $607,000, or $671 per square foot. By Candace Taylor
Broker creates $22.5M six-unit listing in FiDi
You have to hand it to Prudential Douglas Elliman Executive Vice President Ariel Cohen for creativity. In a tough market, Cohen took matters into his own hands by creating a $22.5 million exclusive listing from scratch by convincing five of his neighbors to put their apartments on the market along with his, giving buyers the option of combining them into one eight-bedroom, 9,500-square-foot Goliath.The resulting apartment, at the new condominium Downtown by Philippe Starck, at 15 Broad Street, would have eight bedrooms, 11 bathrooms and 22 windows. The listing is the most expensive one on the market in the Financial District, and one of the largest. If it sold, it would eclipse the previous record for the area, set at the Setai with a $7.82 million sale in 2008, according to Streeteasy.com.
The listing hit the market in January in the midst of the post-Lehman crisis, but Cohen said he is seeing renewed interest now that economic and market conditions are perking up.
Recently, “we’ve gotten a lot of overseas inquiries” about the mega-listing, he said, adding that the current uptick in activity has made him optimistic the listing will move during the traditionally busy fall season. “Usually August is a dead zone,” he said. “But it [was] extremely busy in terms of business. It’s so bizarre.” By Candace Taylor
Related exec takes Columbia position funded by SL Green CEO
A Related Companies executive is heading back to school as the leader of Columbia University’s real estate development program.Vishaan Chakrabarti, a developer, architect and planner, is leaving his position as executive vice president of design and planning at Related this fall to take charge of the real estate development program at Columbia’s Graduate School of Architecture, Planning and Preservation, the university announced last month. Chakrabarti will be responsible for expanding the program’s faculty, reviewing the curriculum and making admissions more competitive, he told The Real Deal.
“The idea is to make it the best-in-class real estate program in the world,” Chakrabarti said. “There are actually very few terminal professional degrees in real estate [and] it has all the makings because it’s housed in one of the greatest architecture and planning schools, and it’s got an affiliation with one of the best business schools.”
Chakrabarti said he thinks the 23-year-old master’s program, which recently expanded to three semesters, is at “a great pivotal point” and can accomplish its goals within five years.
The funding for Chakrabarti’s position, the Holliday professorship, comes from a donation from SL Green CEO Marc Holliday, an alumnus of the program, and his wife Sheree Holliday. By Sara Polsky
Core expands business to include more rentals
Real estate marketing firm Core is expanding its core business to include more rentals. The company has enlarged its rental presence and acquired its first rental director, Regis Roumila. Core CEO Shaun Osher said he still plans to focus on high-end units and new developments.“I think there’s a niche that is very much needed in this marketplace, where the rental market is very much perceived as something on the lower end,” said Osher. “I think there’s been a void in the market, and we’re looking to fill that void.”
This move comes amid a time when more agents are getting into the rental game, to ride out a bad market. Osher said that his brokers — there were 38 at the group as of last month, according to Core’s Web site — will work on both sales and rental deals. While the group plans to expand — Osher wouldn’t say how many new agents he plans to hire — it will remain a boutique firm.
Osher said that Roumila was ideal for the job because of his extensive on-the-job experience as a rental broker.
“Regis [Roumila] was a very high-performing rental agent,” Osher said. “He owned his own company, and before that he was at Century 21 and Manhattan Apartments.”
Osher would not reveal any specific rental listings Core plans to represent.
TRDWhile brokers know they’ve got to work all their sources to keep
business flowing, in this down market, leads from their managers are
more coveted than ever. While the practice of managers “feeding” certain brokers potential
buyers or sellers can lead to behind-the-scenes sniping between agents,
it’s a reality of the business. In a down market, fed leads are less likely to go to inexperienced
brokers, or those with few connections, because management typically
doles them out to top producers, sources said. “A new agent is unlikely to get fed high-quality leads,” said Noah
Rosenblatt, founder of the firm Urban Digs. “Usually, management feeds
leads to the most productive agents, because then you don’t have to
worry about a young agent not bringing the sale in.” [more]With three months to go to until the end of the year, many claim it’s way too early to jump to conclusions. Nevertheless, some brokers are saying that at least a few Wall
Streeters are resuming apartment searches. In a turnaround from what
was expected just a year ago, some of them are anticipating hefty
year-end bonuses. Goldman Sachs, for instance, announced in July that after two
profitable quarters, it would set aside $11 billion for employee
bonuses. “I am a little surprised people are calling this soon,” said Richard Steinberg, a broker with Warburg Realty Partnership. [more]It’s the New York real estate marriage of the century: Later this
month, Jared Kushner and Ivanka Trump are set to get married before 500
guests in a ceremony at the Trump National Golf Club. Jared, the boy-wonder publisher who made a name for himself when he
bought the New York Observer, is the son of Charles Kushner, founder of
the multi-billion-dollar real estate empire Kushner Companies, where
Jared is also an executive. Ivanka, of course, is the daughter of The
Donald and a vice president at the Trump Organization. Industry folk think a union between the two is almost guaranteed to
result in a real estate powerhouse. The question on some minds as the
real estate golden boy and girl prepare to marry: What would a
prenuptial agreement between the two look like? [more]1974: Nation’s largest federal-supported housing project opens
Starrett City, the nation’s largest federally subsidized housing project, was dedicated 35 years ago this month in the Canarsie neighborhood of Brooklyn.The long-delayed project on Jamaica Bay in eastern Brooklyn was first envisioned in 1964 as a complex with 19 apartment buildings with a price tag of $161 million.
By 1967, construction executive Allen Christensen, who was the lead sponsor, had dropped out, and the new sponsor was the United Housing Foundation, builders of Co-Op City, for the project known as Twin Pines Village. But the company dropped out, too, blaming the city for a slow approval process. Ultimately, Starrett Housing Corporation and National Kinney partnered to build the $325 million complex.
The 5,881-unit development is comprised of 46 buildings between 11 and 20 stories tall, and is home to some 25,000 people. It is the city’s second-largest housing development, behind Co-Op City in northeastern Bronx, which opened in 1971.
Starrett City was built as part of the middle-class Mitchell-Lama housing program and received federal, state and local subsidies in exchange for regulating rents and capping the owner’s annual return at 6 percent.
In 2006, the owners, Starrett City Associates, put the development up for sale, but vocal opposition from residents and politicians hindered the process.
In July of this year, Albany approved a refinancing of the owner’s $240 million mortgage, which could yield as much as $400 million or $500 million, reports said.
1938: Feared Manhattan prison the Tombs offered for sale
The city put the four-decade-old prison known as the Tombs, as well as the adjacent Criminal Courts Building, up for sale 71 years ago this month. The city suggested the property on the blocks bounded by Lafayette, Centre, White and Leonard streets could be torn down for new structures or converted into offices or other commercial uses. The site had an assessed valuation of $3.7 million.The decrepit buildings had no acceptable buyers and were eventually demolished and replaced by the Municipal Courts Building, with an address of 111 Centre Street.
The 1898 prison and adjacent red brick courthouse, built in 1894, were joined by the so-called Bridge of Sighs. The buildings were foul smelling and structurally weak, as they were built over the former Collect Pond on wood pilings.
The potential auction was announced after development of the replacements for the aging structures was under way. The new Tombs and Criminal Courts buildings were opened in 1941 at 100 Centre Street.
The Fire Department suggested in 1942 it could use the Tombs for a college for firefighters, but that plan was abandoned.
Demolition of the parcel was announced in 1945, and was completed in 1948. The site was given to the Park District in 1960 and became the Collect Pond Park in 1961.
1922: State’s first real estate broker’s license law takes effect
The first law in New York state requiring a license to practice as a real estate broker or salesperson went into effect 87 years ago this month, bringing tighter regulation to an industry with scant oversight.The law, which took effect Oct. 1, required all individuals and corporations that buy, sell or lease property for a fee to be licensed.
“Under the present loose system, real estate men complain [that] a host of so-called real estate brokers have no other office than their hats,” the New York Times reported a year before the law went into effect.
The law was supported by the Real Estate Board of New York, the state Association of Real Estate Boards and other industry groups.
The law allowed for the revocation of a license if accusations of misrepresentation, fraud or incompetence were sustained by the state Tax Commission, which first administered the law. Within a few years, the Department of State took over management of the law.
The license was good for one year and cost a broker $25 and a salesperson $5.
Today, there are 57,620 licensed brokers and 61,262 licensed salespeople in New York, according to the Department of State.
Compiled by Adam Pincus
Just like the economic crisis spread from subprime borrowers, then from
bank to bank, and finally throughout the broader economy, the
catchphrases used to capture the fallout have their own means of
virus-like contagion. One of the catchiest phrases I’ve heard so far is “extend and pretend,”
describing a common approach banks employ in dealing with problem loans
today. The idea is to “extend” a loan past its maturity date to keep it
from defaulting and showing up as a bad loan on the bank’s books –
therefore “pretending” that everything is hunky dory. Comments
“Stupid, stupid, stupid cheap.” That’s how low prices have to fall before the commercial real estate market hits bottom, Steven Roth, the chairman of Vornado Realty Trust, predicted earlier this year. In a letter to shareholders in April, the square-jawed mogul confided, “I think we are now at the third and last stupid.” [more]As commercial buildings change hands and landlords seek to squeeze more profit out of their properties, full-service brokerage firms are sharpening their knives for what insiders believe will be a feeding frenzy for new office leasing opportunities. A building’s leasing agent — a firm such as CB Richard Ellis or Cushman & Wakefield — represents the landlord in leasing negotiations, and such contracts often are packaged with overall building management. [more]
Zhann Jochinke, an associate broker at Argo Residential, put an alcove studio on the market last year for $525,000. But the offers that came in were as low as $390,000. “People were putting bids out there just to see if the person had to sell,” he recalled. More recently, however, he convinced the seller to drop the price to around $490,000. [more]It’s often said that the devil is in the details — and for many New York City buyers and sellers, that’s increasingly become the case in the down market. New development brokers and real estate lawyers say many of the attempts they are seeing among buyers to get out of contracts are from those arguing that the measurements on their condos are different from what they were promised. They say that sometimes buyers will invoke the claim over a minor quibble, such as small floorplan discrepancies or an inch or two difference in ceiling height. [more]
Brooklyn’s official motto may be “Fuggedaboutit,” but the borough’s real estate industry is not having an easy time shaking thoughts of double-digit price drops and troubled residential projects. Overall, the median closed sales price in Brooklyn has already fallen back to 2005 levels, dropping 19 percent over the past two years, according to StreetEasy. Rental listing prices dropped 12 percent over the past year, not including all of the concessions landlords are throwing in these days. [more]
