Fortress buys Sheffield57 at auction for $20M
Following two months of legal challenges and financial turmoil, Fortress Investment Group acquired the controversial Sheffield57 condominium for a mere $20 million during a foreclosure auction last month.
Fortress, a Manhattan-based hedge fund that previously acquired more than $100 million in defaulted Sheffield loans, made the lone bid at the auction, giving it total control over the 322 West 57th Street holding company. Out of the few dozen attendees, there were only two other registered bidders and neither made an offer for the building.
The sale, arranged by Eastdil Secured and held at the Midtown offices of Allen & Overy, the law firm representing Fortress, is considered a minor miracle for —developer Kent Swig, who struck a June agreement to bring in the hedge fund as a white knight.
After buying the defaulted mortgage loan and senior mezzanine loan, Fortress advanced several million dollars to help pay off common charges and unpaid mechanics’ liens that Swig had accumulated.
Swig overcame a ferocious legal challenge from Yair Levy and Serge Hoyda, the majority investors at Sheffield57, who alleged that Swig misappropriated more than $50 million in construction funds.
The two partners and Gramercy Warehouse Funding, a junior mezzanine lender on the project, filed separate suits in July to prevent the auction. Motions to block the auction were denied by a State Supreme Court judge.
The foreclosure sale effectively wipes out Levy and Hoyda’s interest in Sheffield57, a former 845-unit rental building that they bought with Swig for $418 million in 2005, one of the biggest acquisitions of a residential tower in U.S. history. By David Jones
Court gives hope to Manhattan House tenants
A group of 24 market-rate tenants at the struggling Upper East Side condominium Manhattan House were granted the right to appeal their evictions to the New York State Appellate Division, a move that could renew the debate over the rights of nonstabilized tenants in a residential conversion.
In December 2008, an appeals court overturned an earlier ruling to block the evictions of 29 tenants at Manhattan House who were originally issued eviction notices during the conversion of the property from a rental building to a condo.
The tenants refused to leave the building after developers Peter Kalikow and Jeremiah O’Connor acquired the property at 200 East 66th Street for a record $623 million in 2005. The developers planned to convert the 583-unit rental building into a luxury condo, but faced significant opposition from tenants who challenged the legality of their evictions.
Attorney Adam Leitman Bailey, who is handling the tenants’ appeal, says he will argue that the tenants were legal occupants of their apartments at the time of the conversion and had the right to get their leases renewed.
Lawyers for the tenants previously argued that the developer tried to illegally push out market-rate tenants from their apartments through harassment by offering new leases with exorbitant rent hikes and refusing to accept rent payments. The court ruled, however, that the landlord merely exercised his right not to renew tenants with expired leases. By David Jones
Sapir’s 100 Church Street hit with $3M in liens
The Sapir Organization’s office rehabilitation project at 100 Church Street has financial challenges that extend beyond the scuttled lease deal for the Claremont School that led to a lawsuit against SL Green Realty last month.
Seven architectural and contracting firms that have worked at 100 Church Street in Lower Manhattan claim they are owed nearly $3 million in unpaid invoices since March from the building’s owner, Sapir, a Midtown-based developer and owner.
Between March and August, the companies filed mechanics’ liens totaling $2.89 million, including $202,919 by Long Island City-based Remco Maintenance and $1.7 million by Ecker Window, based in Yonkers, according to a review of New York County Clerk records by The Real Deal.
The liens were filed against the entity that owns the building, 100 Church Owner LLC, which is controlled by Sapir.
One company, Gruzen Sampton Architects, filed a mechanics’ lien for $328,398 in June, then filed a lawsuit against Sapir to foreclose on that lien on Aug. 4 in New York State Supreme Court. (Company head Alex Sapir was not named in the suit.)
That was just three days before Sapir claimed in a lawsuit filed in the same court that it was blocked by lenders SL Green and Gramercy Capital from finalizing the 255,000-square-foot lease with Claremont School, which would have been the largest lease in the 21-story, 1 million-square-foot building.
(As of press time, Sapir relinquished control of 100 Church Street to SL Green, which has hired real estate investment firm Eastdil Secured to solicit interest from potential buyers. The building is slated to be sold at auction Oct. 15, Crain’s reported.) By Adam Pincus
Barak Realty to open across town
As the economy has shaken up the real estate industry, far more firms have closed offices than opened them. But one firm recently added another office to the “open” column: Barak Realty, which signed a lease last month for a storefront space at 1458 Third Avenue, between 82nd and 83rd streets, company president Barak Dunayer said.
The company needs to build out the 700-square-foot space and plans to open the office in November, Dunayer said. Sixteen to 20 agents, both new hires and a few “anchors” from the firm’s 237 West 72nd Street office, will work out of the new space, he said.
The Upper West Side office, which has about 40 agents, is currently the company’s only office.
Dunayer said that after a rough fourth quarter in 2008, business improved in the first two quarters of this year, so it made sense for the firm to open a new office.
“I attribute this to hard work and good professionalism and [the] skills of our agents,” he said. “They adapted to the new market out there.” By Sara Polsky
UrbanDigs head leaves Halstead for venture
Well-known blogger Noah Rosenblatt has left his post as an associate broker at Halstead Property to focus more attention on his popular real estate analysis Web site, UrbanDigs.com, and launch a new consulting business.
Rosenblatt will continue to work as a real estate agent, but his license is now being held by the newly founded company associated with his Web site, UrbanDigs Analytics and Consulting.
Over the next six to eight months, Rosenblatt and his partner, Jeff Bernstein, will also redesign the Web site “to make it more social and interactive,” and add a suite of analytical tools to help buyers and sellers assess the state of the real estate market, Rosenblatt said.
A former equities trader, Rosenblatt has gained a loyal coterie of followers since he founded the UrbanDigs.com blog in 2005, applying his knowledge of macroeconomics to real estate. By mid-2007, Rosenblatt was predicting the end of the Manhattan real estate bubble.
“I always thought the industry had a car salesman-like approach,” Rosenblatt said. “The goal of UrbanDigs has always been to provide an unbiased view of what’s happening.” By Candace Taylor
Golf star Vijay Singh buys $5M Lincoln Square penthouse
Professional golfer Vijay Singh and his wife, Ardena Seth, recently purchased a $5.675 million penthouse condominium at 555 West 59th Street in Lincoln Square.
The 3,369-square-foot duplex unit in the newly constructed Element near West End Avenue has four bedrooms and a wood-burning stove and was listed in June at $6.9 million by Brown Harris Stevens, according to StreetEasy.com.
The 46-year-old golfer signed a contract for the unit July 1, and then closed on the sale July 23, according to city property records posted last month.
The 34th- and 35th-floor apartment has views to the north, east and south and includes a 1,463-square-foot terrace, the listing said. By Adam Pincus