Anglo gets green light to sell $385 million mortgage loan

Judge admonishes Apthorp legal team for trying to duck a prior court hearing

TRD New York /
Dec.December 14, 2011 06:25 PM
Courtyard at the Apthorp

Following months of legal maneuvering, a state Supreme Court judge has ruled that Anglo Irish Bank can finally sell the troubled mortgage loan backed by the Apthorp condominium on Manhattan’s Upper West Side.

Judge Jeffrey Oing issued an order Nov. 29 finally allowing Anglo Irish Bank to move ahead with the sale of the $385 million mortgage loan to Dallas-based Lone Star Funds, but sources familiar with the negotiations say a final agreement was still being worked out to complete the deal.

The Apthorp loan, which has a remaining balance of $225 million. just before the suit was filed Sept. 13, was one of the largest in a group of $5 billion in troubled loans to be acquired by Lone Star. Anglo agreed to sell its entire $9.5 billion U.S. portfolio after the Irish government took over the troubled lender and agreed to sell off all of its non-core holdings around the world. JPMorgan Chase and Wells Fargo agreed to buy the remaining tranche of performing loans.

Oing issued the final ruling after publicly admonishing the Apthorp legal team for attempting to back out of an October court hearing related to a final resolution of the loan dispute.

“You know something, my grandmother told me a long time ago, if you have to explain yourself, you’re already in a deep hole,” Oing told lawyers for the Apthorp at an Oct. 28 hearing in open court.

The sale to Lone Star has been on hold since September when the Apthorp developers, led by Africa Israel USA, filed suit to block Anglo Irish from selling the $385 million note, alleging the lender previously agreed to retain 51 percent of the loan. The Apthorp developers claimed such a sale would potentially cause the condo conversion to fail.

The 163-unit luxury building, located at 2211 Broadway between 78th and 79th streets, was acquired by Africa Israel and developer Maurice Mann for $426 million in 2007,
marking one of the most expensive and controversial condo deals in New York history. Africa Israel, led by Israeli billionaire Lev Leviev, kicked Mann off the project in 2010 after it claimed Mann mismanaged the conversion and then worked out a deal to restructure the mortgage loan with Anglo Irish.

The developers were forced to withdraw their lawsuit against Anglo Irish after The Real Deal reported that in a February 2011 filing with state Attorney General Eric Schneiderman, the Apthorp developers said they were aware of a plan to sell the loan, but claimed it would have no impact on the building.

Schneiderman launched an investigation and found that sworn statements in the February 2011 filing, contradicted allegations in the Anglo Irish suit, where the Apthorp developers claimed that a sale of the building loan would threaten the viability of the condo conversion. Schneiderman levied a $190,000 fine against the developers, temporarily shut down the sales office and forced the developers to offer refunds to buyers who were under contract, but had not yet closed on their condo purchases

Sources say at least three buyers were under contract at the time of the AG investigation, but it remains unclear whether those buyers asked for a refund of their escrow deposits.

Apthorp officials declined to comment through a spokesperson, as did a spokesperson for Lone Star Funds and lawyers for Anglo Irish Bank. A spokesperson for Anglo Irish was not immediately available for comment and nor was attorney Gregg Weiner, who represented the Apthorp in the Anglo Irish suit.

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