Leviev planned to market Apthorp for $552M
December 31, 2008 01:10PM By David Jones
The Apthorp
Israeli real estate mogul Lev Leviev floated a plan in November to put the struggling Apthorp condominium conversion up for sale for more than $550 million, according to court records reviewed by The Real Deal.
Leviev claimed in the court documents that the Apthorp board of directors agreed to hire CB Richard Ellis to sell the building for $552 million and that managing partner Maurice Mann rejected it. Mann's lawyer told The Real Deal there was no such agreement and that putting a distressed asset up for sale would make it impossible to sell condos.
In addition, Leviev, who owns half of the Upper West Side building, wants to have Mann removed from the conversion, alleging that he not only rejected the plan, but has also engaged in excessive spending and illegally "warehoused" apartments at the building, according to court records. The Leviev emergency injunction filing was first reported by the Wall Street Journal.
Leviev was out of the country and not immediately available for comment.
One week ago, Leviev urged the New York State Supreme Court to place the Mann dispute before a rabbinical arbitration board, called the Beth Din of America, in order to prevent the building from going into foreclosure.
Mann, a veteran New York developer, agreed to buy the apartment building at 390 West End Avenue, for a record $426 million in 2006 at the height of the market. Leviev later stepped in to become his partner in the investment, and the two agreed to convert the 163-unit rental building into one of the most expensive condominiums in the city, selling for more than $3,000 a square foot.
In March 2007, Anglo Irish Bank agreed to provide a $393 million first mortgage and Apollo Real Estate Finance Corporation, a unit of Apollo Real Estate, agreed to provide $135 million in mezzanine financing, which would help finance the deal and provide for a $95 million renovation.
Amid slumping sales, Mann filed a $500 million suit against Anglo Irish Bank, Apollo, Petra Fund REIT and Guggenheim Structured Real Estate claiming that Apollo wrongfully declared the loan out of balance and tried to force him into making a $22 million "ransom" payment to keep the building out of default. He alleged that Apollo Real Estate was a rival bidder for the Apthorp in 2006, and wanted to use this opportunity to snatch the building away from him. When asked about his relationship with Leviev earlier this month, Mann told The Real Deal, "It's a business relationship," without elaboration.
Mann's attorney Theodore Steingut said the Leviev allegations are "completely without merit," adding that placing the building up for sale in November would have been "suicidal" in the current economic climate.
Steingut said there was no warehousing of apartments, that certain employees were allowed to live in the building because they were needed for the renovation work and that there was a provision in Mann's agreement with Leviev for a rabbi from the Beth Din to settle the dispute.
The Apthorp was acquired for $2.6 million per unit, which was a record price for New York real estate. Under the Martin Act, the conversion was a non-eviction plan, which meant that the new owners could not legally evict more than 80 rent stabilized tenants, some who were paying less than $1,000 a month.
Tenants say the owners have since gone after rent-stabilized tenants with frivolous lawsuits, claiming that the building is not the primary residence of some tenants, and making other claims that are a bit more creative.
"There was a lawsuit against a woman on [the top floor]," recalled Ron Blumer, president of the Apthorp Tenants Association. "She put some plants outside of her window and they claimed she infested the building with ants. The judge laughed them out of court."
Steingut, Mann's attorney, denied that there were any "improper" measures taken against tenants.
So far, sales have been slow. Court records indicate that the Apthorp had one contract signed in early December for $6.1 million and had contracts out for two additional sales.
Streeteasy.com says there are eight apartments at the Apthorp on the market at prices ranging from $3.45 million for a 1,750-square-foot, two-bedroom unit, up to $15.5 million for a 6,197-square-foot, five-bedroom apartment.
There is a January 9 deadline to reach an agreement with the lenders.
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Comments
Anonymous
Sell it to our government, they buy anything.
Comment #1 Posted By: Anonymous 12/31/08
Anonymous
This will really drum up sales.
Comment #2 Posted By: Anonymous 12/31/08
Anonymous
Once again, before bringing anybody into a sales office to buy in a conversion or new building, better do some due diligence regarding the financial situation of the sponsor/developer.... Apthorp, Sheffield 57, Five Franklin Place, who's next???
Comment #3 Posted By: Anonymous 12/31/08
Anonymous
I would like to know who at CBRE told them they could put this piece on the block for 552 M$ ??? People believe they are sitting on gold (in this case diamonds...) when it's a bunch of RS apartment... What would be the cap rate on this? Less than 2%?
Comment #4 Posted By: Anonymous 12/31/08
Anonymous
Anybody knows what's going on with the Clocktower conversion on Madison Square that was advertised earlier? Are Leviev and Africa-Israel still committed to the project??? And what about Donatella Versace?
Comment #5 Posted By: Anonymous 12/31/08
Anonymous
Ah, Manhattan is soon to become the foreclosure capital of the US. Lovely indeed. Greed kills. Absolute greed kills absolutely. Happy 2009, suckers.
Comment #6 Posted By: Anonymous 12/31/08
Anonymous
What kind of person would sign a $6.1 million purchase agreement in a building chock full of rent-controlled and rent-stabilized apartments? Their attorney should be disbarred!
Comment #7 Posted By: Anonymous 12/31/08
Anonymous
I have a family member in the building. They foolishly relied on the republican administration in NYC to facilitate a favorable ruling against rent controlled / Stabilized tenants. They also expected to kick out the old ladies by increasing the rent through MCI adjustments for the millions they are investing. With democrats coming in, they will have much less luck. From what I hear, Leviev is actually a good guy - he stands by his religious ethics, and is trying to play by the book but he is also new to real-estate and probably panicking now. IMHO if they were smart they would try and make a sweet deal to the tenants instead of cheating them.
Comment #8 Posted By: Anonymous 12/31/08
Anonymous
Donatella is still committed to the project. Um, I'm sorry, it seems that she was just committed. Anyway, the project will certainly be a great project and buyers will be lucky to get units for 4000 per foot. Lucky as in they will lose all their money, but at least they are not invested in luxury hotels in Gaza.
Comment #9 Posted By: Anonymous 12/31/08
Anonymous
All the Gucci, Versace, Prada or Valentino labels the developer tosses at this project, will not change the fact that he overpaid for this office building.
Comment #10 Posted By: Anonymous 01/01/09
Anonymous
another mezzanine deal by the apollo real estate advisors what a track record for such a prestigous organization 20 pine and the athrop
Comment #11 Posted By: Anonymous 01/01/09
Anonymous
This is the most magnificent building I have ever seen. Leviev obviously has his problems stock price is 5% of what it was. Mann has one of the best reputations among NYC Developers. This building is a gem worth fighting over. If I had the cash I would live there. I hope Mann beats the desperate Leviev out of the country.
Comment #12 Posted By: Anonymous 01/02/09
Anonymous
another bad investment for Guggenheim too. this is the tip of the iceberg.
Comment #13 Posted By: Anonymous 01/02/09
Anonymous
Lousy projections when they bought, lousy projections at the price the public was willing to buy, lousy estimates of costs, bad advise from brokers, lenders, and advisers when this group bought, what else could go wrong? the seller was a savvy old guy who took the new guys for a ride. the building was never worth more than 200 million. the ny times building was not worth what the previous group paid. leviev may know his diamonds, but he should have left real estate to the pros. mann was carried away but he would have worked something sensible if given the chance. allied irish was a misguided bank, and now deservedly in receivership and owned by the government. apollo is a maker of great deals for themselves. they will probably come out of the deal owning the building.
Comment #14 Posted By: Anonymous 01/02/09
Anonymous
$3000 a foot at 79th & Broadway!! Think about it!!
Comment #15 Posted By: Anonymous 01/05/09
Anonymous
complicating any deal is that the irish bank which provided the primary financing went bust and was taken over by the irish government. seems to made too many lousy loans around the world
Comment #16 Posted By: Anonymous 01/07/09
Anonymous
it's one of the most detailed and beautiful buildings in Manhattan. Who would have known the economy would stoop this low?
Comment #17 Posted By: Anonymous 01/09/09