Rector Square’s unsold units near auction

By David Jones | July 30, 2010 05:30PM

Related is seen as the likely buyer of the discounted apartments

Rector Square and Yair Levy

Irish Bank plans to auction the unsold 230 apartments of Rector Square,
the foreclosed Battery Park City condominium conversion, in a bulk sale
in September, with some analysts valuing the remaining units at $400 a
square foot.

The lender is waiting for a final ruling from a state Supreme Court
judge, who heard closing arguments regarding the auction this morning.
That final ruling could come within the next few weeks.

“The suit is moving toward conclusion and we anticipate a sale
in mid- to late-September,” Chris Sullivan, an attorney with Herrick
Feinstein, which represents Anglo Irish Bank, told The Real Deal, through a spokesperson. “There are a few procedural items to work out, but a sale of the property appears likely.”

Anglo Irish foreclosed on the 303-unit Battery Park City condo after
developer Yair Levy defaulted on more than $117 million in loans in
2009. The bank has battled Levy in state Supreme Court for nearly one
and a half years to get the final decision on the case, which was one
of the city’s most closely watched residential battles.

Lawyers familiar with the case say the lender will be allowed
to sell Rector Square’s unsold apartments in bulk at the 225 Rector
Place building. Lawyers for Levy had argued for the judge to allow them
to resume sales of individual apartments, which were originally sold
for more than $1,000 a square foot in 2008. Analysts estimate that the
unsold 230 apartments (some of which have affordable housing tenants in
them) are worth no more than 40 percent of their prior market value.

Related is seen as the most likely suitor for the unsold
shares since the company helped complete the building after the
receiver was appointed and has been renting out units at the property.

Ben Thypin, senior market analyst at Real Capital Analytics, expects
the building to be a target of corporate apartment providers like
Equity Residential and Korman Communities, because of its proximity to
Ground Zero and the World Financial Center, the headquarters of
American Express.

Marc Held, attorney for 46 unit owners at the building, said
his clients are in support of a bulk sale because they cannot sell or
refinance their apartments until the building is at least 50 percent
sold. They told the judge that the new owners must operate the property
under the terms of the original offering plan.

A spokesperson for Related was not immediately available for comment.

Levy acquired the former rental building in 2005 from Related,
but ran into severe financial difficulties in late 2008 before
construction workers walked off the site. Just last month, Attorney
General Andrew Cuomo filed a $7.4 million suit
against Levy for allegedly siphoning money from the Rector Square
reserve fund for personal expenses. In that suit, Cuomo asks the court
to ban Levy from future sales of any condos. Neither Levy nor his
attorney was available for comment.

Anglo Irish filed suit against Levy in 2009, and brought in
attorney Michael Miller to take over the building as a court-appointed
receiver. Miller completed construction with the help of Related, which
took over management of the property in March 2009.