The Real Deal March 2015

22

Finding the residential market’s “sweet spot”

42

Behind the scenes at $2B Waldorf sale

52

Who’s Preet’s next target?

70

N EW YO R K R E A L E S TAT E N E W S

www.TheRealDeal.com

Big alterations for Garment District

74

Hidden merit of the LLC

Vol. 13 No. 3 March 2015 $3.00

The year of the Chinese investor Why the pipeline of cash from China is poised to grow, and how NYC players are gaining access to deals p40

New York’s top real estate lobbyists A look at the influence traders behind the industry’s major political battles at City Hall and in Albany p48

Eichner’s rise and fall --- and rise again

Bruce Eichner has returned to NYC development in a big way.

Is his confidence a sign the boom is almost over? p36

Manhattan’s billion-dollar leases

A breakdown of the office deals with the largest price tags, and the lucky landlords who snagged them p56 ILLUSTRATION BY NOAH MCDONOUGH

ASHKENAZY

ACQUISITION

285 Lafayette Street

Premier Manhattan SoHo

LOCATION Frontage on Lafayette, Jersey and Mulberry Streets in the heart of SoHo. SIZE ±6,900 SF Available *Divisions Considered

AVAILABLE FRONTAGE ±43’-4” on Lafayette St. ±49’-4” on Mulberry St.

SUBWAY PROXIMITY within 2 blocks within 2 blocks within 3 blocks

INFORMATION • Frontage on both Lafayette & Mulberry Streets • Brick walls, arched brick doorways, tin ceilings, new wood floors • Neighboring retail includes REI, Equinox, Zara, Uniqlo, Forever 21, Bloomingdales, Hollister, H&M

148 Church Street

TriBeCa

LOCATION SIZE Corner of Chambers Retail A: ±516 SF Ground & Church Streets Retail B: ±627 SF Ground Cellar: ±1,846 SF

SUBWAY PROXIMITY at foot of building within 5 blocks

*can be combined

INFORMATION • Join brand new Vitamin Shoppe!

• The Chambers Street subway station is the 14th busiest station in New York City with an average of 54,000 people passing through weekly

1424 Lexington Avenue

Upper East Side LOCATION SIZE Northwest corner of Available A: ±895 SF Lexington Avenue & 93rd St. Available B: ±480 SF Total: ±1,375 SF *can be combined

FRONTAGE Over 75’ of frontage on Lexington Avenue & 40’along 93rd St. SUBWAY PROXIMITY within 3 blocks within 7 blocks

INFORMATION • Located in the Upper East Side’s Carnegie Hill neighborhood •Current tenants include Ottomanelli Brothers Restaurant, Vela Pizzeria & Pet Central

1991 Broadway

Lincoln Square/Upper West Side FRONTAGE LOCATION SIZE Over 55’ of prime glass On Broadway between 67th Ground: ±3,107 SF frontage on Broadway Mezzanine: ±1,965 SF & 68th Streets Lower Level: ±2,074 SF SUBWAY PROXIMITY Total: ±7,146 SF within 5 blocks INFORMATION • Directly adjacent to the Apple store at Lincoln Center • Directly across from the World Famous Lowes Theater and only 3 blocks from Lincoln Center for the Performing Arts

145 Greene Street

SoHo LOCATION Corner of Greene Street & Houston Street

SIZE Ground: Lower Level: Total:

±1,936 SF ±811 SF ±2,747 SF

FRONTAGE Over 124’ of frontage along Houston Street

INFORMATION • Extraordinary frontage in SoHo • Neighboring retail includes: Chanel, Louis Vuitton, Club Monaco, Ralph Lauren, Burberry, Dior • At the cross-roads of SoHo, NYU, Greenwich Village, and NoHo

For Leasing Information Please Contact:

A.J. Levine • alevine@aacrealty.com • 646.214.0245 Daniel Iwanicki • diwanicki@aacrealty.com • 646.214.0251

Retail Opportunities

ASHKENAZY

ACQUISITION

4250 Broadway @ 181st Street

Washington Heights

LOCATION Spans the entire city block between Wadsworth Avenue & Broadway on the South side of W. 181st St. SUBWAY PROXIMITY within 1 block within 4 blocks SIZE ±25,865 SF

FRONTAGE ±150’ on 181st St. ±102’ on both Broadway & Wadsworth Ave.

*divisions considered

INFORMATION • Neighboring retail includes: Capital One,Duane Reade, McDonald’s, Foot Locker, Citi Bank, The Vitamin Shoppe • Located 1 block North of the GW Bridge Bus Terminal which serves over 4 Million passengers annually and is undergoing a $183.2 million renovation with an array of first class retail and will quadruple in size to 120,000 SF

Upper Manhattan LOCATION Southwest Corner of 5th Avenue & 116th St. FRONTAGE ±45’ on Fifth Avenue; ±119’ on 116th St.

SIZE Available ‘A’: ±3,295 SF* Available ‘B’: ±2,444 SF* Total: ±5,739 SF *can be combined

SUBWAY PROXIMITY within 1 block within 3 blocks within 4 blocks

1400 Fifth Avenue

INFORMATION • 13’ average ceiling heights • At the base of Harlem’s first sustainably constructed condominium building

Philip House (1311-1337 Lexington Avenue)

Upper East Side LOCATION Located on Lexington Avenue between 88th & 89th Streets

SIZE ±940 SF Ground

SUBWAY PROXIMITY within 2 blocks

INFORMATION • Join brand new Pure Barre and Fika!

• Situated at the base of Philip House, a classic 12-story prewar condominium conversion containing 71 luxury residences • Located in the heart of Carnegie Hill, home to some of the world’s wealthiest residents

Lower East Side LOCATION Corner of Delancey & Clinton Streets, at the foot of the Williamsburg Bridge FRONTAGE Over 100’ of frontage along Delancey Street

SIZE Ground: ±2,725 SF Up To: ±5,250 SF* *with proposed 2nd level

SUBWAY PROXIMITY within 1 block

156 Delancey Street

INFORMATION • Be seen by over 111,189 vehicles and over 200k people traveling the bridge each day • Directly across from the newly approved Essex Crossing Development, a 1.9M SF mixed use project including 1,000 new housing units

TriBeCa LOCATION Southeast Corner of Church Street & Leonard Street

SIZE Ground: Cellar: Sub-Cellar: Total:

241 Church Street (66 Leonard Street) ±7,080 SF ±8,155 SF ±13,236 SF ±28,471 SF

FRONTAGE ±125’ on Church Street ±40’ on Leonard Street

INFORMATION • Located at the base of the premier residential building in TriBeCa and directly across the street from 56 Leonard, the largest residential development in TriBeCa (145 units over 60 stories) • Central, highly accessible location situated between Wall Street and the Financial District to the South and the West Village and SoHo to the North

Join our Leasing Team:

careers@aacrealty.com

WE ARE PLEDGED TO THE LETTER AND SPIRIT OF THE U.S. POLICY FOR ACHIEVEMENT OF EQUAL HOUSING OPPORTUNITY THROUGHOUT THE NATION. WE ENCOURAGE AND SUPPORT AN AFFIRMATIVE ADVERTISING AND MARKETING PROGRAM WHICH THERE ARE NO BARRIERS TO OBTAINING HOUSING BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN. THE SKETCHES, RENDERINGS, PICTURES AND ILLUSTRATIONS ARE PROPOSED ONLY AND THE DEVELOPER RESERVES THE RIGHT TO MODIFY, REVISE OR WITHDRAW ANY OR ALL OF THE SAME AT ITS SOLE DISCRETION WITHOUT NOTICE. THE RENDERINGS ILLUSTRATE AND DEPICT A LIFESTYLE, HOWEVER, AMENTIES, FEATURES AND SPEFICIATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE. ALL INFORMATION IS DEEMED RELIABLE BUT IS NOT GUARANTEED AND SHOULD BE INDEPENDENTLY VERIFIED. ALL REAL ESTATE ADVERTISED HEREIN IS SUBJECT TO THE US FEDERAL FAIR HOUSING ACT OF 1968 WHICH MAKES IT ILLEGAL TO MAKE OR PUBLISH ANY ADVERTISEMENT THAT INDICATES ANY PREFERENCE, LIMITATION, OR DISCRIMINATION BASED ON RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN. PLEASE CHECK WITH YOUR LOCAL GOVERNMENT AGENCY FOR MORE INFORMATION. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. THIS IS NOT AN OFFER FOR CONTRACT OR SALE IN THE STATES OF NY, NJ OR MASS.

ABOVE ALL Introducing Turnberry Ocean Club, the new standard in luxury, oceanfront, private club living. Designed by famed international architects Carlos Zapata and Robert Swedroe, the building is both modern and timeless, intelligent yet simple, with expansive views of the Atlantic Ocean and sparkling Miami skyline.

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Designer: James Carpenter Design Associates Photograph: Tex Jernigan

Contents M A R C H

2 0 1 5

20

Weather makes market mischief

22

Hitting the sweet spot

26

By the numbers: Penthouse views

26

After empty open houses and burst pipes, brokers look to a ‘hot’ spring.

The lower end of the luxe market gets little buzz, plenty of action.

Manhattan’s new $150M listing vs., well, everything else on Earth.

The Antilia in India is the priciest home in the world.

28

At the desk of: Alan Rosenbaum The GuardHill Financial CEO on his Jimi Hendrix fandom, the stocked bar cart in his office and his encounter with basketball greatness.

Rosenbaum said the mortgage business “looked like fun.”

words ...

32 InThetheir month’s funniest and most

32

insightful real estate comments.

Sub Culture Every day 300,000 subway riders stream through

Zestimates 34 Erroneous Zillow’s estimates are not just off in NYC, they’re off everywhere.

Adam Tantleff

40

China’s town A special report on the ins-and-outs of China’s ‘unlimited’ NYC investments. Plus, how a little-known Chinese insurer snagged the Waldorf Astoria for $2B.

Manhattan’s Fulton Center, their underground trek

now brightened by entertainment venues and daylight reflected from its skylit cable-net overhead. Created by

James Carpenter Design Associates and engineered

by Arup for Grimshaw Architects, this marvel of

collaboration is a new bright spot beneath city streets.

Read more about it in Metals in Construction online.

W W W . O M I N Y. O R G

36

Bruce Eichner rises again After being ‘exiled in the desert,’ the developer is building in Manhattan. Is his confidence a sign that a crash is coming?

10 March 2015 8 October 2012 www.TheRealDeal.com www.TheRealDeal.com

www.TheRealDeal.com March 2012 00

825 Third Avenue, 37th Floor New York, NY 10022 646 - 472-1900 www. madisonrealtycapital.com

Recent Transactions

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Residential Construction Manhattan, NY February 2015

Mixed-Use Manhattan, NY January 2015

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Loan Origination

Loan Origination

Multifamily Manhattan, NY January 2015

Mixed-Use Queens, NY December 2014

Includes deals closed by Sullivan Realty Capital, LLC, an investment adviser registered with the Securities and Exchange Commission doing business as Madison Realty Capital, and its afďŹ liates. Past performance does not guarantee future results. It should not be assumed that the recommendations made in the future will be proďŹ table or will equal the performance of the securities listed. Holdings are subject to change.

Architect: Skidmore, Owings & Merrill Structural Engineer: WSP Cantor Seinuk Photograph: Tex Jernigan

Contents continued estate top lobbyists 48 Real Find out which influence traders

Manhattan U.S. Attorney Preet Bharara

are fighting the industry’s battles.

is Preet’s next target?

52 Who The prosecutor’s pledge to expand his probe beyond Sheldon Silver has some industry players on edge.

56

52

Manhattan’s monster leases The 10 most valuable office deals inked last year will generate nearly $8B for their lucky landlords.

70 The Garment District: In need of alterations Landlords are anxiously awaiting a gamechanging rezoning, even while some fret about a loss of the nabe’s manufacturing roots.

The Garment District in 1955

72

20

Day in the Life of: Robert Reffkin

Residential Market Report

The Compass CEO on his espresso habit and penchant for late-night karaoke.

Checking in with brokers to take the pulse of the apartment market.

World View

30

Commercial Market Report Tracking rents and vacancy figures in Manhattan’s three office districts.

94

National Market Report Reports from around the country on significant developments and trends.

While the world watched, One World Trade Center grew in both height and symbolism, its 1,776-foot crystalline form bringing unmatched views back to Lower Manhattan. A redundant structural steel frame, the result of creative collaboration between Skidmore, Owings & Merrill and WSP Cantor Seinuk, ensures that its safety is as substantial as its stature.

Read more about it in Metals in Construction online.

Robert Reffkin, the co-founder and CEO of Compass

96

The Deal Sheet A roundup of office and retail leases, building buys and financing.

A rendering of the Virgin Hotel New York

112

The top-heavy new Virgin Hotel displaces a ghost — and may even be heavenly.

Development Updates An update of the construction and sales status of projects around the city.

114

Residential Deals An insider’s look at how home sales really happen.

W W W . S I N Y. O R G

130

Calendar of Events Check out this month’s activities.

136

We Heard A lighter look at industry buzz.

10 12 March October 2015 2012www.TheRealDeal.com www.TheRealDeal.com

86

Magnificent in NoMad

88

Lending in a volatile time Competition heats up for NYC residential mortgage lenders, as Dodd-Frank rules add red tape.

still in the game 138 Doctoroff, The modern-day Robert Moses on his Olympic obsession and his bar mitzvah hangover. www.TheRealDeal.com March 2012 00

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THE REAL DEAL N E W YO R K R E A L E S TAT E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Eileen AJ Connelly EDITORIAL DEVELOPMENT DIRECTOR Heather Grossmann MANAGING WEB EDITOR Hiten Samtani

Whether you need to buy or sell a building having a real estate broker that knows the local players is key - the buyers and the sellers. You need an intensely dedicated broker who is still on the job long after the lights have gone out elsewhere.

SOUTH FLORIDA MANAGING EDITOR Ina Cordle ART DIRECTORS Ronald Gross, Keziah Makoundou SENIOR REPORTER Adam Pincus REPORTERS Rich Bockmann, E.B. Solomont CONTRIBUTORS C. J. Hughes, Jennifer White Karp

You need Rosewood Realty Group

ASSOCIATE WEB EDITOR Mark Maurer WEB PRODUCERS/WEB REPORTERS Tess Hofmann, Katherine Kallergis, Claire Moses SOCIAL MEDIA EDITOR Kerry Barger PRODUCTION COORDINATOR Victoria Tuturice RESEARCH ASSISTANT Kyna Doles CONTRIBUTING DESIGNER Juan Zielaskowski

212.359.9900

www.rosewoodrealtygroup.com

Rosewood Knows New York

We are pleased to announce the following results for the year-to-date February 28th 2015, Rosewood has completed total sales of

$653,473,000 which include:

Manhattan: Aggregate sales of

$258,168,000

22 Buildings / 486 Residential Units / 18 Commercial Units Brooklyn: Aggregate sales of

$269,055,000

31 Buildings / 869 Residential Units / 20 Commercial Units Queens: Aggregate sales of

$97,300,000

7 Buildings / 350 Residential Units / 11 Commercial Units

14 March 2015 www.TheRealDeal.com

DIRECTOR OF MARKETING OPERATIONS Yoav Barilan NATIONAL SALES DIRECTOR Ross Fox SOUTH FLORIDA ADVERTISING DIRECTOR Chris Cuomo ADVERTISING SALES Eran Evron, Nick Mascaro, Robert Stearns, Nicki Chadi, Sigalit Levi, Marcus Guest, Barry Holland, Frankie Grima, Justin O’Garrow DIRECTOR OF DIGITAL SALES Junaid Zahid ONLINE SALES MANAGER Eric Reyes WEBMASTERS Nima Negahban, Andrew LoCascio ASSOCIATE WEB DEVELOPER Amir Ghaheri FINANCE DIRECTOR/HUMAN RESOURCES Kenneth Cyrus ACCOUNTING ASSOCIATE Karen Francis OFFICE MANAGER Virginia Durso CIRCULATION Paul Destanko DISTRIBUTION Mitchell Newman, Patricia Hofmann, Forero Express

Bronx: Aggregate sales of

ATTORNEY Barry J. Friedberg, Trachtenberg Rodes & Friedberg LLP

$28,950,000

ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang

6 Buildings / 236 Residential Units / 2 Commercial Units

© Copyright 2012 Rosewood Realty Group. All rights reserved.

PHOTOGRAPHER Marc Scrivo

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2015. Call 212-2601332 or email news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332.

Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

Photography by Peter Margonelli

EDITOR’S NOTE

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Real estate crime time

political bombshell exploded in Albany last month and the debris is covering the New York City real estate industry.

In a series of stories this month, we examine the fallout surrounding the arrest and indictment of the once-powerful speaker of the state Assembly, Shelly Silver.

First we take a close look at the investigation being spearheaded by U.S. Attorney Preet Bharara, who has already singled out so-called Developers 1 and 2 for their inappropriate relationships with the ex-speaker. Bharara has vowed to continue his investigation, a fact that has some political and real estate players on edge.

We also survey the most powerful real estate lobbyists in both the city and state and examine what’s next for the industry on the state level now that Silver is out. It all starts on page 48.

Meanwhile, looking more globally and less parochially, what’s the latest amenity for ultra-rich foreign condo buyers in Manhattan? Huge, industrial sized washers and dryers. The reason? To launder all that ill-begotten cash they are funneling into New York City real estate.

Ba-dum-bump!

Of course, I’m joking, but last month’s massive, five-part New York Times series about international buyers clearly implied that Manhattan real estate is rife with money laundering.

The front-page series was an interesting exposé of more than a dozen foreign buyers with shady backgrounds who have secretly purchased apartments at the Time Warner Center, hiding behind LLCs. But frankly, it was not all that surprising to those in the industry. Check out the reaction to the piece on page 74.

There is also more in the issue than stories about the industry’s shadowy underbelly.

Our main cover story, which starts on page 40, is a deep look at the Chinese investors who are sending billions to New York. With China’s economy cooling, it’s no secret that investors there are looking for deals elsewhere and, increasingly that elsewhere is New

The once-powerful speaker of the state Assembly, Shelly Silver, is out and U.S. Attorney Preet Bharara is vowing to continue unearthing dirt. That could mean trouble for real estate players connected to Silver.

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York. We take apart everything from the individual apartment purchases to the building buys and development. We also examine the army of gatekeepers — from Chinese wealth managers to lawyers — who New York players must connect with if they want to get in on the deals. And reporter E.B. Solomont gives a blow-by-blow account of how the Chinese insurance company Anbang ended up buying the iconic Waldorf-Astoria hotel from the powerful Blackstone Group for a cool $2 billion. Let’s just say there were lots of 15 hour flights between NYC and Shanghai.

Also check out reporter Rich Bockmann’s profile of Bruce Eichner. The colorful real estate developer is busy building the tallest residential buildings in both the Flatiron District and Harlem, but has a mixed track record in New York and Las Vegas real estate.

“His very name,” Bockmann writes, “is one mentioned in real estate circles as a portentous omen: Some say an Eichner building rising out of the ground is a harbinger of a market about to turn south.” Decide for yourself on page 36.

And don’t miss our ranking of the priciest Manhattan office leases of 2014. The top 10 deals will generate a massive $8 billion for their landlords. Leading the charge was Credit Suisse with a renewal at 11 Madison Avenue, worth $1.7 billion over the next 20 years. That was one of a slew of monster deals at the Sapir and CIM-owned tower, which sits in the heart of the white-hot Midtown South office market. See page 56.

Lastly, check out the story about Zestimates, those automated property values generated by real estate website Zillow, on page 34. While TRD has reported about their inaccuracies in New York, it turns out the problems go beyond the city’s borders. (Zestimates have a “median error rate” of about 8 percent nationally and 11 percent in Manhattan.

That amounts to a $110,000 error on a $1 million apartment here.)

It’s hard to believe this billion dollar company — which had 73 million unique visitors in December, or about one in five Americans — could be so far off base. Imagine launching a rocket or erecting a building with an 11 percent margin of error. That might not be the perfect analogy, but a home purchase is usually the biggest investment a buyer makes in their life, so basing a decision off those figures is seriously worrisome.

Enjoy the issue.

Stuart Elliott

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RESIDENTIAL MARKET

Weather makes market mischief

Brokers look forward to spring open houses, leaving broken pipes and icy steps behind

maxed out micro-units

BY E.B. SOLOMONT ew York real estate may be hot, but it’s not immune to freezing temperatures. The so-called Siberian Express, as some dubbed the seasons’ prolonged cold snap, left a trail of ruined open houses and delayed listings in its tracks.

While seasonal dips are not new, this year’s exceptional cold, snow and ice made it difficult for some buyers to get around.

Now, brokers said, buyers suffering from cabin fever are all the more eager to snag an apartment this spring.

“Everyone is really excited that the calendar is turning toward [spring] because there’s been a lot of appointments cancelled, deferred or delayed because it’s been an epic February in terms of temperature,” said Jason Haber, a broker at Warburg Realty.

He said he delayed listing at least one unit, a Classic Six on the Upper West Side that will have an ask of around $2.2 million. “I felt the market would be more

N

Photos: Dooley Images

Nationwide, sales of existing homes also dropped 4.9 percent in January to their lowest rates in nine months, according to the National Association of Realtors.

Janine Young, an agent at Bond New York Properties, said she showed up for an open house in Fort Greene, only to find out that the seller’s broker was locked out.

She waited with the other broker while he called a locksmith. “By the time he got into the property, he realized that the pipes had burst due to the cold weather,” Young said.

Aramis Arjona, an agent at Mirador Real Estate, was covering an open house for another agent one particularly frigid weekend and only one person showed up.

“Unless you have a serious time crunch or emergency, you will put it off,” he said.

Of course, this is still New York real estate, and a good number of agents said frigid temperatures haven’t cooled the market. Warburg’s Gruenberger said she wouldn’t cancel an open house, even in a

“Agents will be drinking through a fire hose this spring as clients come out of a long cold winter with money to spend.”

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receptive in March,” he said late last month. “The last thing I’d want to do is put a beautiful apartment on the market on a day when its -14 degrees.”

In addition to frigid temperatures, snow and ice made it difficult for buyers to navigate the city to reach open houses.

“Agents will be drinking through a fire hose this spring as clients come out of a long cold winter with money to spend,” said Mike Loftus, a salesperson at William Raveis NYC. Annie Cion Gruenberger, an agent at Warburg Realty, said the only people who showed up to open houses in the worst weather were either very serious or suffering from cabin fever. “On the one warmer Sunday in February, I held an open house for a one-bedroom with a terrific kitchen and approximately 30 people came through the door,” she said. “It absolutely felt like spring fever.”

The cold temperatures are showing up as a chill in the numbers. In January, just 310 condos in Manhattan went into contract, down 6.3 percent from December and, significantly, the lowest monthly total in three years, according to StreetEasy. Condos spent a median of 82 days on the market, up sharply from 19 days in December.

snowstorm. “Many people want to take advantage of low interest rates,” she said, adding that serious buyers aren’t deterred by the weather.

Marisa Mohan, also a Bond New York agent, had an open house at 621 80th Street in Bay Ridge on Feb. 15, when temperatures dropped to around 4 degrees. Her boyfriend had to chip three inches of ice off the front steps, and the house, which was asking $735,000, had no heat. “We could see our breath inside,” she said, but she got 14 offers.

Another Bond agent, Annette Holmgren, said she launched sales in mid-February for a one-bedroom at 330 West 72nd Street that was asking $1.1 million. “We ended up just doing two open houses and going to best and final with a price $111,000 over ask,” she said.

Town’s David Gomez Pearlberg said even though many buyers have been hibernating, the phones are still ringing as everyone gets ready for the spring market.

He used the freezing weeks to connect clients with lawyers and lenders. “In this market,” he said, “once you see the place, we need to move pronto.” TRD

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Hitting the sweet spot

Lower end of luxury market gets little fanfare, but properties under $3.5M see a lot of action

BY C. J. HUGHES orget the über-luxury apartment sales that grab all the headlines. The far more dependable segment of the Manhattan market is much lower on the pricing totem pole: It’s between $1.5 million and $3.5 million.

“The sweet spot is really this lower bracket, for the mere mortals among us. It’s where the action is,” said Jonathan Miller of appraisal firm Miller Samuel.

The segment accounted for a full 20 percent of the entire Manhattan market — or roughly 6,285 sales — between January 2013 and January 2015, according to an analysis by The Real Deal of data from the listings website StreetEasy.

As TRD reported last month, just 1 percent of all Manhattan condo and coop sales tracked by StreetEasy during that time pulled in $10 million or more, while 4 percent went for $5 million or more. The remaining sales were under $1.5 million.

And the $1.5 million-to-$3.5 million bracket is growing, judging by active sales listings. In mid-February, there were 1,113

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in the same price range. That building, which is being marketed by its developer, Time Equities, was nearly half sold last month, StreetEasy shows.

The market for these properties provides reliable commissions, brokers said. Agents who don’t want to hold out for home runs can still score with many base hits.

Brian Rice, a veteran broker with the Corcoran Group who works with partner Doug Albert, said in 2014, transactions for less than $6 million accounted for 60 percent of his deals. That included an Upper West Side two-bedroom co-op that sold for $1.6 million in November, after being listed for $1.9 million last April.

“The co-op market was lagging a bit with days on the market, but people are looking at these co-ops now and saying, ‘The value is there,’ ” said Rice, who added that young families, doctors and Wall Streeters are the typical buyers in this price range. Hedge fund executives prefer pricier homes, he said.

And despite being associated with recordsetting deals in high-profile condos, foreign buyers also flock to this end of the market,

Deals in the $1.5 million-to-$3.5 million range accounted for about 6,300 sales in the last two years, or 20 percent of all residential transactions in Manhattan.

Manhattan condos and co-ops listed in that price range, of 4,600 listings total, the data show. That’s 24 percent of the total market.

Stephen Kliegerman, president of Halstead Property Development Marketing, said he’s been advising developers for several years to build condos at the lower luxury price point. “We took a look at what was coming in 2012 and saw that everybody was building to the very, very high end,” Kliegerman said. “So we decided we would build to a marketplace that hasn’t been addressed in years.”

For example, at 540West, a 114-unit condo at 540 West 49th Street that’s scheduled to open this spring, about a third of the units are priced in the $1.5-to-$3.5million range and no units are listed for more than $4 million. (The majority of units at the project — from Fortis Property Group and Wonder Works Construction Company — are priced under $1.5 million.)

While the project’s location between 10th and 11th avenues may not warrant higher prices, the units there are selling at a rapid clip. As of mid-February, 92 units had sold, after a year of sales. “We were preselling apartments before the building was even out of the ground,” Kliegerman said.

Similarly, the lion’s share of listings at 50 West, the crystalline 64-story, 191-unit spire going up in the Financial District, fall

said Rice, who in December sold a penthouse at 59 John Street to an Asian buyer.

Toni Haber, a top broker with Douglas Elliman, echoed that point, saying that while foreign buyers make up a large chunk of the $10 million-plus properties, they are increasingly jumping in at lower rungs, too.

One of her clients, a wealthy Singaporean woman, is looking to spend under $2 million for a Manhattan two-bedroom. Haber expected few choices, given the persistent inventory crunch. “I came up with close to 50 listings,” she said. “I was kind of shocked.”

That crop of mid-market listings is all the more surprising considering current land costs, brokers said. As land prices have risen, developers feel increasingly compelled to build outrageously expensive apartments in order to pencil out their projects. As a result, many of the new development buildings with units listed in this price range are located in up-and-coming areas. The Far West Side’s 540 West 49th Street is a case in point.

In the end, some brokers seem to be betting that the slow and steady tortoise of the middle-market may beat out the highprofile, huge-price-tag hare, since the middle segment is made up of “real apartments being sold to real people,” said Fred Peters, the president of Warburg Realty, echoing several other brokers, “and I think that will continue on.” TRD www.TheRealDeal.com March 2010

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YOUR ONE-IN-A-MILLION HOME NEEDS THAT ONE-IN-AMILLION BUYER. HOW DO YOU ENSURE THE TWO MEET?

BY

Penthouse perspectives

THE

NUMBERS

one57

11% The price increase the first apartment flipped at One57 saw in the fivemonth period between May and October. By comparison, the median price of the entire residential Manhattan market appreciated 8.8% last year.

A view on how the priciest Manhattan apartments stack up against, well, everything

assistance programs to move the homeless out of shelters in Mayor Bill de Blasio’s $77.7 billion preliminary budget for fiscal year 2016, unveiled in early February.

$237 million The total paid in May for the most

expensive apartment in the world, a penthouse at the Candy Brothers’ One Hyde Park in London. The unknown buyer shattered the prior record, a $221 million sale in 2011 in the same tony Knightsbridge neighborhood.

J

$500 million Estimated value of the most

ust three years ago, a penthouse at 15 Central Park West sold for $88 million, shattering the record for the priciest New York City home sale ever. At $13,000 per square foot, it’s still a record holder, but the overall price looks like child’s play compared to today’s mega sales. Late last year, for example, Gary Barnett’s Extell Development closed a $100.5 million penthouse at One57 (for about $9,200 per square foot). But even that record may not stick for long. As The Real Deal reported exclusively last month, the Chetrit Group and David Bistricer’s Clipper Equity plan to list a unit for an audacious $150 million at 550 Madison Avenue, the former Sony headquarters, which they are converting to condos. An offering plan filed with the state Attorney General’s office shows it will measure a whopping 21,504 square feet — a vast space holding eight bedrooms, eight bathrooms and 10 powder rooms. Shockingly, at about $6,975 per square foot, it may be a good deal — at least for a small group of 1 percenters.

By comparison, the Zeckendorfs plan to ask $130 million, or $10,489 per foot, for the triplex atop 520 Park Avenue. And the city’s current pricing listing Downtown is a $118 million three-unit combo at the Battery Park City Ritz Carlton for roughly $7,600 a foot. Here’s a look at how these record-breakers compare to everything from the world’s most expensive homes to municipal budgets to the economies of small countries. By Jill Noonan and Jennifer White Karp NEW LISTING

expensive home in the U.S., Ira Rennert’s Sagaponack, N.Y. “Fair Field.” The property has never changed hands, so it’s impossible to know what it would actually sell for. The top Hamptons trade was hedge funder Barry Rosenstein’s $147 million purchase of an 18-acre beachfront spread on Further Lane last year.

$1 billion The reported value of the world’s

most expensive home — a 27-story, 400,000-square-foot home known as Antilia in Mumbai, India, owned by business mogul Mukesh Ambani, who has a reported net worth of more than $22 billion. The home has three helicopter pads, underground parking for 160 cars, and a staff of 600.

$1.74 million The average sales price of an apartment in New York City in 2014, a new record, up from 2013’s high of $1.5 million.

$69,659 Median annual household income in Manhattan, where the median monthly rent is $3,100.

$28.4 million Funding allocated for rental

BY THE NUMBERS

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26 March 2015 www.TheRealDeal.com

$186.9 million The GDP of the Marshall Islands, a

tiny island economy, ranked one of the lowest in the world in a list of just over 200 nations. The U.S. provides the Marshall Islands with approximately $70 million annually.

$10 million Value of the Lorraine Schwartz

diamond and emerald jewelry Beyonce rocked at the 2015 Grammys, with 150 carats of diamonds and emeralds on her fingers.

$6.25 million The additional sum New

York City now pays to provide 177,000 public middle school students with free breakfast and lunch. The overall free lunch program costs about $430 million.

Sources: New York Times, Bloomberg News, Forbes, Vanity Fair, Wall Street Journal and The Real Deal reporting.

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: F O SK E

D E H T T

A

ALAN ROSENBAUM

A

lan Rosenbaum is the CEO of GuardHill Financial Corp., a Manhattan-based mortgage bank and brokerage firm. The 82-person company, which Rosenbaum founded in 1992, brokers and backs about $1 billion in residential mortgages in the tri-state area annually, he said, with a focus on Manhattan and Brooklyn and an eye toward growing in Queens. Despite the New York focus, Rosenbaum’s roots are in the Deep South. He grew up in a “middle class home in a nice neighborhood” in Baton Rouge, Louisiana, and graduated from Louisiana State University in 1986. As he tells it, he “wasn’t the best student,” but he was ambitious and full of ideas. As a teen, Rosenbaum, now a married father of three girls, worked at his dad’s store, Bert’s Camera and Record Center.

He moved to New York after college and took a job as a manager in Bloomingdale’s gourmet foods department.

He ended up in the mortgage business by chance, after meeting a friend of his cousin who was in the field. “It looked like fun,” he said. Rosenbaum went to work for a firm called Skyscraper Consultants, where he became a partner about six months into the job. Today, his office, on the 31st floor of 140 East 45th Street, is not far from Bloomie’s. BY CLAIRE MOSES

CLOCK

LETTER

Rosenbaum bought this clock in

A letter he wrote in longhand to

Nantucket, where he rents a

his father in 1984, when he was

house for about three weeks

21, and worked at his dad’s store

a year with his family. He

after school. In it, he asks his dad

considers the island his

to “have patience” and “give me

“happy place,” and the

time.” “I know I have not shown

clock reminds him of

much so far, but one day you’ll be

being on the beach “with

proud of me,” Rosenbaum wrote.

a lot less clothes on, at 85 degrees, with the waves

PHOTO WITH DAD

crashing.”

Rosenbaum and his father about 10 years ago. The elder

JIMI HENDRIX PORTRAIT

Rosenbaum closed his store in the late 1980s and moved to New

Rosenbaum bought this painting of Jimi Hendrix at an art gallery in

York. He worked in GuardHill’s accounting department from 2001

the Berkshires about two years ago. He considers Hendrix a musical

until he died in September.

“genius,” noting that he played guitar in “a way that nobody else

“I came up [to New York]

played.” “He was a leader that others followed.”

and I made it, and he was

This guitar-handled B.B.

very proud,” Rosenbaum

King mug was a gift from

said of his father. “He is

a Memphis-based client.

definitely my inspiration,

Little did the client know,

my hero.”

Rosenbaum is a huge fan of

HATS Rosenbaum — who in addition to rooting for

B.B. KING MUG

the famed blues musician.

LSU, is also an avid New

BAR CART

Orleans Saints fan —

So much of a fan, that he

wears these hats to show his “Louisiana pride.”

Rosenbaum keeps a bar cart in his office stocked

snuck backstage at a

As a kid, he had season tickets to the Saints during the team’s

with Scotch and bourbon, along with

concert on Long Island

first season in 1967.

Gray Goose vodka, Veuve Clic-

about 15 years ago to meet King.

quot and Dom Pérignon.

“PISTOL PETE” AUTOGRAPH

After a long day of work, he said it’s nice to unwind

NBA Hall of Famer Pete

with colleagues “with-

this

out having to go to a

autograph for Rosenbaum

noisy bar.” His drink

in the late 1960s. Maravich,

of choice? A 21-year-

who starred for Rosenbaum’s

old Balvenie single

alma mater LSU, thrilled

malt Scotch. “That’s

Rosenbaum when he walked

not there,” he said,

into Bert’s Camera and

“because I like it so

Record Center unannounced.

much.”

Maravich

28 March 2015 www.TheRealDeal.com

scribbled

BACKGAMMON SET This backgammon set — which Rosenbaum’s wife found at Barneys — is a near perfect match with his custom-made desk. The set gets regular use during the winter after work, when he plays with colleagues. He said he’s drawn to backgammon because it’s “forward thinking.” During the summer, however, he opts for fishing and golf.

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Manhattan office stats

COMMERCIAL MA R K E T

AVAILABILITY AVG. ASKING RENT RATE

Availability rises as landlords chase higher rents

New space hits the market at bigger asking rents, driving up averages throughout Manhattan

BY ADAM PINCUS ew product put on the market with an eye toward capturing broad rent increases boosted the availability rate across Manhattan last month.

It was the first time in nearly a year availability rose in all three of the borough’s office leasing submarkets, information from commercial brokerage Colliers International showed.

None of the new listings were blockbuster spaces; they were mid-sized blocks spread around Manhattan, for example at 437 Madison Avenue in Midtown, at 50 West 23rd Street in Midtown South and at 200 Vesey Street in Lower Manhattan, the Colliers data showed.

“We see opportunity to create value as we continue our strategy to consolidate, vacate and redevelop tenant spaces in order to lease to better quality tenants at higher rents throughout our Manhattan portfolio,” said Anthony Malkin, CEO of the real estate investment trust Empire State Realty Trust, during his firm’s fourth quarter earnings call.

The new space that hit the market drove the availability rate up to 10.5 percent last month, a bump of 0.3 points from 10.2 percent in January, the Colliers figures showed.

The Kaufman Organization added five full floors at 437 Madison Avenue to the market.

The asking rent for most of the building is $100 per square foot or more, a rate above the overall market average. Such new availabilities above the average

N

market,” Lenchner said, while a $60 million building upgrade was completed. “This is the first time the building is asking more than $100 per foot.” That’s far above Manhattan’s average asking rent last month, which was $67.50 per square foot, up 58 cents per foot from January, according to Colliers.

Meanwhile, leasing activity fell from 3.1 million square feet in January to 2.1 million in February, the preliminary statistics from Colliers showed.

Tenants looking for more modest space in other portions of Midtown were having trouble finding product. asking rent drive overall rent statistics higher.

At the highest floor on the market, the 34th, the asking rent is $108 per foot, said Michael Lenchner, director of leasing for Sage Realty, which manages Kaufman buildings. A JLL team is also representing the building.

“We held the floors off the 30 March 2015 www.TheRealDeal.com

For Midtown, the deal volume declined sharply, to 1 million square feet, from 1.9 million feet in January, while the availability rate rose to 11.1 percent from 10.8 percent during the same time, Colliers data showed.

Even so, the average asking rent rose to $76.22 per square foot, up $1.05 per foot from January.

Midtown Feb ’15 11.1% $76.22 Jan ’15 10.8% $75.17 Midtown South Feb ’15 7.9% $61.65 Jan ’15 7.7% $61.59 Downtown Feb ’15 13.1% $54.74 Jan ’15 12.5% $53.70 Source: Preliminary data from Colliers International

Midtown A private equity fund involved in the aerospace and defense industries inked one of the most expensive office leases completed over the past 12 months in Manhattan. Veritas Capital Fund Management signed a deal for about $180 per square foot, taking 15,000 feet on the 9th floor of Sheldon Solow’s 9 West 57th Street, in the Plaza District, information from leasing database CompStak showed.

Veritas, now located at 590 Madison Avenue, did not respond to a request for comment.

Even as that super-pricey deal was being done, tenants looking for more modest space in other portions of Midtown were having trouble finding product, some brokers said.

“Office leasing has continued to stay strong, said Robert Kaplan, managing director of leasing at Hidrock Realty, who focuses on Herald Square and the Garment District. There, “for great space between 500 and 2,500 square feet, it’s slim pickings.”

Manhattan Feb ’15 10.5% $67.50 Jan ’15 10.2% $66.92

Left: The Kaufman Organization made five full floors at 437 Madison Avenue available at above Midtown’s average asking price last month. Right: Private equity fund Veritas Capital Fund Management inked one of the most expensive recent deals for about 15,000 square feet at Sheldon Solow’s 9 West 57th Street.

Left: Digital marketing firm Amobee signed a 3.5-year lease for 12,250 square feet at 162 Fifth Avenue. Right: Two firms, a marketing agency called the Zeno Group and an architecture firm, NBBJ, inked deals at 140 Broadway, for 12,000 square feet and 20,120 square feet, respectively.

Midtown South Even though brokers say rising prices are scaring away some technology and media firms from the tight market in Midtown South, the so-called TAMI sector continues to sign deals in the area.

Last month, the digital marketing firm Amobee, which focuses on mobile platforms, signed a 3.5-year lease for 12,250 square feet for the 10th floor of 162 Fifth Avenue, a 150,000-squarefoot building at 21st Street in the Flatiron District, CompStak data showed. The firm is relocating from 155 Fifth Avenue, across the street.

James Caseley, an executive managing director at ABS Partners Real Estate, represented 162 Fifth. He declined to comment, and the tenant did not respond to a request for comment.

The overall leasing activity in the submarket was far lower last month than either January or February a year ago. Last month, tenants inked deals for about 475,000 square feet of space, which was 47 percent behind the 899,000 square feet taken in January. But both those were far behind the 2 million square feet signed in February 2014, a particularly active month.

Colliers figures also showed the average asking rent rose slightly in Midtown South, rising by 6 cents per foot to $61.65 per foot. At the same time, the availability rate rose by 0.2 points to 7.9 percent.

Downtown A leasing team at 140 Broadway completed two deals recently, one for a marketing agency called the

Zeno Group, which took 12,000 square feet on the 39th floor for 10 years in the high $50s per square foot, CompStak data showed. The firm is leaving Midtown South.

An architecture firm, NBBJ, is moving to the building as well, but was already in Lower Manhattan.

The Seattle-based company has offices around the world, and is moving from 2 Rector Street.

Their new lease for 20,120 square feet, for 10 years, was done in the mid-$50s.

The leasing team including Robert Constable, Willard Overlook and Louis D’Avanzo represented the landlord of 140 Broadway, the German investment firm Union Investment Real Estate.

The rents in 140 Broadway are close to the submarket’s asking rents last month. In February, the asking rent in Lower Manhattan was $54.74 per square foot, up $1.04 per foot from January, the Colliers data showed.

The availability rate Downtown rose the most of any market, up by 0.6 points to 13.1 percent. But at the same time, the market’s leasing activity was far higher than January, driven in large measure

by WeWork. The shared office space provider inked a deal for 240,000 square feet at 85 Broad Street.

Constable has more space available at 140 Broadway, but said the tower is getting plenty of attention.

“We get anywhere between eight and 20 tours a week in the building, because we can [offer from] 1,500 square feet to a block of 100,000. We have a wide range of availabilities,” he said. “We have activity on very high floors with rents starting with a ‘6.’” TRD

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In their words...

The funniest and most insightful comments on real estate

“They have to have the money.

Other than that, that’s it.”

Sotheby’s International Realty’s

Elizabeth Sample, on her process for vetting foreign buyers of high-end apartments.

“In a shocking display of familial treachery, fraud and overweening greed, Jonathan’s father, Arnold, defrauded his son.”

“They make us show our underwear every time one of our clients wants to buy.”

Real estate lawyer Ed Mermelstein, disputing claims that foreign buyers face little scrutiny.

A suit filed against real estate mogul Arnold Penner, accusing him of “hoodwinking” his son out of a real estate deal.

“I had various importantsounding titles, but didn’t go there much.”

Accused murderer Robert Durst, on his role at his family’s real estate company.

“We’re not God, and we’re not birds.”

HKWN’s Marc Kushner, on how renderings that use the “God view” of buildings from above create false expectations among buyers.

32 March 2015 www.TheRealDeal.com

It “may very well be the worst landlord in the city of New York.”

“We were nobody, now we are the 800-pound gorilla.”

Madison Realty Capital’s Adam Tantleff, on becoming a force in the mid-market.

“The pattern is for New York to become wealthier, not poorer.”

Stribling’s Kirk Henckels, on the city’s historical attraction for the rich.

State Sen. Jeffrey Klein, on the New York City Housing Authority.

“Vanity addresses will no longer be granted on an arbitrary basis.”

Manhattan Borough President Gale Brewer, issuing a warning to developers vying for avenue addresses for projects that are actually located on side streets.

“We believe there’s still a lot of room to run.”

RXR Realty’s Scott Rechler, on the potential for continued gains in the New York office market, despite recently selling a 50-percent stake in six area buildings to Blackstone Hedge.

Sources: New York Times, HBO, Wall Street Journal, New York Daily News and The Real Deal reporting

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REGULATING REAL ESTATE

Erroneous Zestimates

Zillow’s wildly off online price estimates hamper sales

BY KENNETH HARNEY hen “CBS This Morning” co-host Norah O’Donnell asked the CEO of Zillow recently about the accuracy of the website’s automated property value estimates, known as “Zestimates,” she touched on one of the most sensitive perception gaps in American real estate.

Zillow is the most popular online real estate information site, with 73 million unique visitors in December. Along with active listings of properties for sale, it also provides information on houses that are not on the market. You can enter the address or general location in a database of millions of homes and likely pull up key information — square footage, lot size, number of bedrooms and baths, photos, taxes — plus a Zestimate.

Shoppers, sellers and buyers routinely quote Zestimates to real estate agents — and to one another — as gauges of market value. If a house for sale has a Zestimate of $350,000, a buyer might challenge the seller’s list price of $425,000. Or a seller might

W

website, at the bottom of Zillow’s home page in small type is the word “Zestimates.” This section provides helpful background information, along with valuation error rates by state and county — some of which are stunners.

For example, in Manhattan, the median valuation error rate is 11.1 percent — which could translate into a $109,000 disparity on an apartment selling for the median $980,000. In Brooklyn, the error rate is 10.4 percent. In some rural counties in California, error rates range as high as 32 percent.

In San Francisco, it’s 11.2 percent. With a median home value of $1 million in San Francisco, according to Zillow estimates as of December, a median error rate at this level translates into a price disparity of $112,000.

Some real estate agents have done their own studies of accuracy levels of Zillow in their local markets. Last July, Robert Earl, an agent with Choice Homes Team in the Charlottesville, Virginia, area examined selling prices and

In Manhattan, the median valuation error rate is 11.1 percent — which could translate into a $109,000 disparity on an apartment selling for the median $980,000. In Brooklyn, it’s 10.4 percent. demand to know from potential listing brokers why they say a property should sell for just $595,000, when Zillow has it at $685,000.

Disparities like these are daily occurrences and, in the words of one agent who posted on the industry blog ActiveRain, they are “the bane of my existence.”

Consumers often take Zestimates “as gospel,” said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village, California. If either the buyer or the seller won’t budge off Zillow’s estimated value, he told me in an interview, “that will kill a deal.”

Back to the question posed by O’Donnell: Are Zestimates accurate? And if they’re off the mark, how far off? Zillow CEO Spencer Rascoff answered that they’re “a good starting point,” but that nationwide Zestimates have a “median error rate” of about 8 percent.

Whoa. That sounds high. On a $500,000 house, that would be a $40,000 disparity — a lot of money on the table — and could create problems.

But here’s something Rascoff was not asked about: Localized median error rates on Zestimates sometimes far exceed the national median, which raises the odds that sellers and buyers will have conflicts over pricing. Though it’s not prominently featured on the

Zestimates of all 21 homes sold that month in the nearby community of Lake Monticello. On 17 sales, Zillow overestimated values, including two houses that sold for 61 percent below the Zestimate.

In Carlsbad, California, Jeff Dowler, an agent with Solutions Real Estate, did a similar analysis on sales in two ZIP codes. He found that Zestimates came in below the selling price 70 percent of the time, with disparities ranging as high as $70,000.

In 25 percent of the sales, Zestimates were higher than the contract price. In 95 percent of the cases, he said, “Zestimates were wrong. That does not inspire a lot of confidence, at least not for me.” In a second ZIP code, Dowler found that 100 percent of Zestimates were inaccurate, and that disparities were as large as $190,000.

So what do you do now that you’ve got the scoop on Zestimate accuracy? Most important, take Rascoff ’’s advice: Look at them as no more than starting points in pricing discussions with the real authorities on local real estate values — experienced agents and appraisers. Zestimates are hardly gospel. Often, far from it.

Kenneth Harney is a syndicated columnist.

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34 March 2015 www.TheRealDeal.com

GOVERNMENT BRIEFS Mayor eyes Sunnyside Yards for affordable housing Mayor Bill de Blasio’s vision of building a massive affordable housing project with up to 11,250 apartments on the 200-acre Sunnyside Yards in Queens faces opposition on many levels. Gov. Andrew Cuomo, who through the Metropolitan Transportation Authority controls the site, sees it best used for the construction of tunnels connecting the Long Island Railroad to Grand Sunnyside Yards is a busy rail hub.

Central Terminal. Crain’s reported the site also poses geographical and topographical issues. The complex crossover of railroad tracks on the property requires that the MTA and Amtrak agree on any future use. Building a platform over the tracks could also be difficult, given that the bedrock on the site is soft. There is also opposition from the local Councilmember and residents of the nearby Sunnyside Gardens.

High court to hear NYU expansion case The state’s highest court agreed to hear a case that could derail the massive New York University expansion. The Court of Appeals accepted an appeal filed by a coalition that opposes the project, and had won a victory to have a community garden and nearby strips of land that NYU wants to use as a construction staging area considered protected parkland. The Court of Appeals That decision was overturned when the school appealed. Capital New York reported that a loss for NYU could make the multibillion dollar expansion more difficult and even delay it.

Rezoning to bring 7,250 homes to East New York The mayor and City Planning officials unveiled a massive rezoning effort for East New York. The plan would bring roughly 7,250 housing units to the area, along with 1.3 million square feet of commercial space. The rezoning would encompass 11 blocks in the Ocean Hill area to the west of Broadway Junction, along with the majority of East New York and Cypress Hills, marked by Sheffield Avenue to the west, Lincoln Avenue on the east, Fulton Street on the north, and Pitkin Avenue on the south, New York Yimby reported. The effort could bring population levels back to 66,000, the 1960s peak, from the current 48,000 residents. Without rezoning, the city expects only 550 apartments would be built. Community, commercial/retail and industrial space would see greater gains under the rezoning, while autobody-type shops, warehouse and storage spaces and hotels would decrease.

50 arrests made in DOB/HPD bribery probe Two Department of Buildings bureau chiefs and 16 city employees, along with 34 others, were charged with bribery following an investigation by the city Department of Investigation last month. According to Manhattan District Attorney Cyrus Vance’s office, the probe uncovered approximately $450,000 in purported briberies involving 16 staffers from the Buildings and Housing Preservation and Development departments, 22 property managers and owners, as well as two Manhattan D.A. Cyrus Vance contractors and one engineer. DOB employees were charged with accepting sums ranging from $200 to $3,000, and other benefits from property managers and expeditors, which acted as middlemen between the DOB and contractors, homeowners and managing agents. The cases include allegations of bribing officials to dismiss violations, jump lines, issue phony evictions and expedite inspections. The charges included bribery, bribe receiving, falsifying business records, tampering with public records and official misconduct. The arrests followed two years of investigation and an HPD report pointing to potential misconduct. TRD

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PR O F I L E

Eichner rises again The developer with a checkered past marks his return to New York City building with two high-profile projects

Bruce Eichner has returned to NYC development after 15 years of being “exiled to the desert.”

BY RICH BOCKMANN f the Flatiron District’s One Madison condo tower typifies the nadir and the zenith of real estate’s recent history, then Ian Bruce Eichner is perhaps the most fitting developer to eclipse the storied building’s successes — or to get swallowed up in its shadow trying.

With a property grab one broker described bluntly as “ballsy,” Eichner is back building in Manhattan after spending much of the early aughts in Las Vegas developing and, reminiscent of his high-profile rise and crash 25 years ago, surrendering the city’s most expensive casino ever, the Cosmopolitan.

“I was exiled to the desert,” he said.

Now, more than 15 years after last turning over a shovel of dirt in New York, Eichner is back at work, with a pair of ambitious buildings, at a time when experts wonder aloud how much longer the market can climb before a correction.

I

36 March 2015 www.TheRealDeal.com

At 45 East 22nd Street he is planning a 65-story, 777-foot-tall condo tower a stone’s throw from One Madison, the chic spire overlooking Madison Square Park that stood empty as a symbol of excess during the downturn, before breaking a Downtown sales record as the market recovered.

The second project is a massive rental that will eventually include 670 units in Harlem.

When the tower tops out at 32 stories, it will be the tallest building in the neighborhood.

Neither project is without controversy, much like the CEO of the Continuum Company himself.

In fact, his very name is one mentioned in real estate circles as a portentous omen: Some say an Eichner building rising out of the ground is a harbinger of a market about to turn south.

Yet despite his high-profile losses, the developer continues to secure financing.

And while he acknowledged there’s no lack of

competition for buyers among Manhattan’s pricey new glass towers, he’s confident his Flatiron project will set itself apart.

“I’ve got a tall building. I’ve got views. I’ve got five floors of amenities. I’ve got parking,” he told The Real Deal during a visit to the sales center for 45 East 22nd Street, adding that the project is in one of the city’s hottest neighborhoods. “I’m feeling OK.” Eichner, 69, is a charismatic and personable figure who, for all of his downfalls, said his decisions are based on cold, hard logic, grounded in the numbers underlying his projects. And those numbers, he maintains, pencil out.

Big wins and bad bets About his name, Ian Bruce Eichner: It’s “actually pronounced ‘Eye-an,’” he explained, although by age 8, Eichner decided that using two names was too formal. He is known as “Bruce.” The young Eichner grew up in

Sunnyside, Queens, and after graduating from Stuyvesant High School went on to law school.

His father was an academic, an associate dean at what was then called the New School for Social Research. Eichner said his father had him reading “The Canterbury Tales” in Middle English as a youngster, and would have probably preferred his eldest son chose a career path as a tweedy professor teaching English at a small college in New England.

But that was not the future for Eichner, who recalled his father lamenting to his mother, “I believe that our eldest child is entrepreneurial. Indeed, he may be a capitalist.”

After law school, Eichner worked as a prosecutor, but finding life in the public sector financially unrewarding, he got into real estate in the 1970s with the purchase of a rental property in Park Slope.

By the 1980s, he was developing in Manhattan, building a trio of condo towers on the Upper East Side before tackling the 72-story office/condo tower CitySpire near Carnegie Hall.

CitySpire splashed Eichner’s name across the tabloids as it notoriously topped out 11 feet taller than the zoning allowed. There was talk of Eichner actually dismantling part of the building, but in the end, he struck a deal that left the tower intact, in return for setting aside space for nonprofit performance groups.

As the 1980s came to a close, the developer embarked on yet another first for his career: an ambitious 44-story office tower at 1540 Broadway in Times Square, with a complex retail atrium at its base.

The development process was documented in the book, “High Rise: How 1,000 Men and Women Worked Around the Clock for Five Years and Lost $200 Million Building a Skyscraper.”

By 1993, Eichner would surrender CitySpire to his creditors and sell the empty 1540 Broadway to the Bertelsmann publishing company. The decision to have his excess catalogued in ink was his alone — he said his staff voted 40 to 1 against the book — but he says it was still one of the most interesting experiences of his life.

“Now, if I knew the damn thing was going to blow up and if you gave me a preview that the project was going to go belly up, would I have done that? Maybe not.”

Eichner continued to develop in the city, transforming a bankrupt hotel near Central Park into a timeshare hotel dubbed the Manhattan Club, and, in Brooklyn Heights, building the first new high-rise in decades.

By the turn of the century, he was in Miami’s South Beach, at work on a pair of recordbreaking condo towers, and from there it was on to the Las Vegas strip, where in 2008, as the economy went into free fall, lender Deutsche Bank foreclosed on the casino.

Risky strategy pays off Eichner is, according to those who have watched him closely, a shrewd strategist with an eye for complex deals, and those qualities were on display when he made a complicated assemblage on the 22nd Street site.

Continued on page 122

www.TheRealDeal.com January 2014 35 PHOTOGRAPH FOR THE REAL DEAL BY TOBIAS TRUVILLION

Cushman & Wakefield Congratulates Team Knakal

54 142 SALE TRANSACTIONS

PROPERTIES SOLD

+6M $2.2B SQUARE AGGREGATE

CONSIDERATION Thank you to all of our clients, colleagues and friends for making 2014 possible.

ROBERT KNAKAL

Chairman - New York Investment Sales

JONATHAN HAGEMAN Team Manager

Elysa Berlin John Fontana David Kalish Patrick Yannotta Jennifer Djurkovic Thomas Willoughby George D’Ambrosio Dallas Rapoport Zachary Rosenberg Leica Meliton Charlotte Myers Erin Mitchell

Massey Knakal is now Cushman & Wakefield.

For more information visit www.masseyknakal.com

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FOREIGN INVESTMENT

The Year of the Chinese Investor Inside the growing wave of investors buying and building in the five boroughs

F

BY E.B. SOLOMONT or more than two decades, China’s most populated city, Shanghai, has experienced a building frenzy unlike any other: Developers have built office buildings in the city of 24 million as far as the eye can see, including skyscrapers like the under-construction Shanghai Tower, one of the tallest in the world.

But increasingly, Chinese developers and investors are looking elsewhere to build. And a fast-growing number are setting their eyes on New York.

Chinese investors pumped more than $3 billion into the New York real estate market last year. That was nearly 43 percent more than they invested in 2013. And it appears to just be the tip of the iceberg.

With China’s economy cooling, investors are throwing their money into deals in New York. And it’s not just individual Chinese buyers snapping up condo units these days. Institutional players, investors and developers, who’ve made a splash buying trophy buildings over the past two years, are not only continuing to ramp up purchases, but also are accelerating their involvement in condo development and looking for developable New York land.

40 March 2015 www.TheRealDeal.com

“There’s a whole lot of capital in Asia that wants to be invested [here],” said Kevin Swill, chief operating officer of the New York-based Carlton Group, a real estate investment banking firm. “They look to the U.S., even with ups and downs, and it’s still the most stable real estate market in the world.”

It’s been hard to ignore Chinese investors in New York in the last few years.

December, Bank of China agreed to buy 7 Bryant Park for $600 million.

And those trades came on the heels of Fosun International shelling out $725 million in December 2013 for One Chase Manhattan Plaza, now known as 28 Liberty, and Greenland Holdings paying $547 million in October 2013 for a 70 percent stake in Forest City Ratner’s Atlantic Yards

“There haven’t been many times in my career where there’s been such a noticeable influx of capital from a particular group of investors.”

RONALD SERNAU, PROSKAUER ROSE The Beijing-based Anbang Insurance rocked the industry here with its recordsetting, $1.95 billion acquisition of the Waldorf Astoria, a deal that closed last month (see related story on page 42).

Also last month, Chinese insurer Sunshine Insurance Group struck a deal to buy the 114-room Baccarat Hotel from Barry Sternlicht’s Starwood Hotels & Resorts Worldwide for $230 million, or an unprecedented $2 million per room. In

development in Brooklyn, which was promptly renamed Pacific Park.

In addition, over the past two years, Soho China spent $1.9 billion, including $700 million for a stake in the GM building and $600 million for a stake in Park Avenue Plaza.

But these mega purchases actually represent early, and relatively safe, forays into New York real estate for the Chinese.

Many more anxious Chinese investors are

waiting in the wings and are likely to be willing to take on even greater risk, said Terence Tang, managing director of Colliers International’s Asia capital markets and investment services team.

“They have no choice,” said Tang, who is based in Shanghai. “The returns you can get from real estate investment in Asia have been unattractive.”

Economic strength and the value of the dollar, he said, make the U.S. “the brightest spot you can see in terms of growth.”

‘Unlimited’ demand For the first time in 2014, wealthy Chinese buyers spent more on New York City real estate than Russian billionaires.

Chinese investors shelled out $3.35 billion on New York City real estate, both residential and commercial, in 2014, a roughly $1 billion jump from the year before, according to research firm Real Capital Analytics. As The Real Deal reported last month, the only country that invested more in the city was Canada, which spent $3.4 billion.

Other foreign investment trails well behind. Singapore, which clocked in at No. 3 on RCA’s list, threw down $1.6 billion.

ILLUSTRATION BY NOAH MCDONOUGH; PHOTOGRAPHY OF ERIC HORVAT FOR THE REAL DEAL BY TOBIAS TRUVILLION

10

FOREIGN INVESTMENT

NYC’S TOP CHINESE INVESTORS $2.4 billion $1.9 billion $800 million

FUN FACTS ABOUT CHINESE INVESTORS

4. HOUSE-HUNTING TOURS BRING BUYERS TO NEW YORK A cottage industry has sprung up to host giant property expos in China. Meanwhile, a slew of other companies arrange property tours in the U.S. for Chinese investors to travel to NYC in large groups and house hunt.

5. IT’S CHINESE NEW YEAR, WHICH MEANS… … that the lobby of the Mandarin Oriental has been buzzing with potential Chinese buyers in New York to vacation, look at schools for their kids and shop for real estate.

6. CHINESE BUYERS ARE RARELY INTERESTED IN FLIPPING PROPERTIES Unlike private equity firms and REITs, Chinese investors are in it for the long haul.

“They’re hold horizon is generational,” said Gilda Perez-Alvarado, a commercial broker at JLL. 7. CHINESE INVESTORS HAVE AN AFFINITY FOR HOTELS As more Chinese citizens can afford to travel abroad, investors are betting that they’ll fill hotel rooms in New York and elsewhere. An added bonus? Chinese investors like to have a place to put up business associates and host meals when they’re in the city.

8. CHINESE REAL ESTATE WEBSITES AND NEWSPAPERS ARE KEY CONNECTORS With many search engines blocked by the government, real estate websites and newspapers have stepped in to advertise New York real estate. Silverstein Properties has caught on. It’s advertising 30 Park Place in the Hurun Report, a magazine for wealthy Chinese.

9. CHINESE BUYERS DEMAND INTENSE SECRECY While in the U.S. it’s usually the megawealthy demanding confidentially on their real estate buys, in China it’s everyone.

“There is a great concern that their family, friends and business partners could be affected,” said Nikki Field, an agent at Sotheby’s International Realty.

10. DEALS ARE ALMOST ALWAYS DONE OVER DINNER “We Westerners think of a business meeting as taking place during the day,” said Field.

“That’s not a business meeting. That’s getting to know each other.”

$230.5 million

BEIJING CAPITAL DEVELOPMENT HOLDINGS

$99.8 million

KUAFU PROPERTIES

SUNSHINE INSURANCE GROUP

GREENLAND GROUP

BANK OF CHINA

$

$175 million

FOSUN INTERNATIONAL

3. IN SOME CHINESE CITIES, HOUSEHOLDS ARE ONLY ALLOWED TO OWN ONE HOME To cool an overheating housing market, China introduced laws in 2012 to limit home-ownership in several cities, including Beijing, Shanghai and Shenzhen. That, of course, makes owning property elsewhere even more appealing.

$580 million

CHEERLAND INVESTMENTS

2. EVEN AVERAGE INVESTORS ARE STEEPED IN THE REAL ESTATE GAME Because real estate is such a big driver of China’s economy, the Chinese invest in it like a financial commodity. “If they don’t have a mutual fund, they own 10 apartments,” said Joel Rothstein, an attorney at Paul Hastings.

$600 million

SOHO CHINA

1. WEALTH MANAGERS ARE ADVISING MANY CHINESE CITIZENS TO BUY IN NYC As China’s middle class continues to grow, more residents are heeding the advice of financial planners to buy abroad. One of China’s top real estate websites, Juwai.com, said searches for New York real estate have jumped 42 percent in the past six months.

$725 million

ANBANG INSURANCE GROUP

Rounding out the top five were Norway with $1.1 billion, Qatar with $770 million and Japan with $680 million.

“In terms of Chinese investors, I’m not kidding if I say it’s unlimited,” said attorney Min Chan, whose New York City-based Chan Law Associates advises clients participating in the wildly popular EB-5 visa program, which grants visas to foreigners who invest $500,000 in the U.S. economy in exchange for creating at least 10 jobs. More than 80 percent of the 10,000 visas went to Chinese nationals last year.

Chan, who is also a commercial broker at City Connections Realty, said China’s top institutional investors are also looking to make a splash.

“If the Chrysler Building was for sale,” she said, “I’m sure someone in China would pay whatever they’re asking.” (The Chrysler Building sold back in 2008 to an Abu Dhabi sovereign wealth fund for a cool $800 million and does not appear to be back on the block.)

But while the appetite for New York real estate has been strong among Chinese investors for a while, it recently ramped up because of a unique combination of factors, notably a rapidly appreciating Yuan, the slowing Chinese economy, and high property prices and complicated ownership rules in China. In addition, the growing middle class in China is increasing turning to institutional investors (like insurance companies) to manage and invest their newly acquired wealth.

Still, those factors pale in comparison to recent regulatory changes in China — namely looser restrictions governing how much money Chinese companies can invest abroad.

The impact of those new rules, which started taking effect in 2012, are showing up very clearly in the numbers.

Between 2008 and mid-2014, Chinese investors poured $33.7 billion into real estate in the U.S., predominately targeting New York, Los Angeles and Washington, D.C., according to Cushman & Wakefield.

Of that total, $5.9 billion went to Manhattan and another $717 million was invested in the outer boroughs.

Ronald Sernau, co-chair of the real estate practice at the law firm Proskauer Rose, said more than half of all transactions valued at $150 million or more were handled by his team involve a Chinese player. In two of the largest Chinese investment sales to date, Proskauer represented JP Morgan in its sale of 28 Liberty to Fosun, and Anbang in its Waldorf acquisition.

“There haven’t been many times in my career where there’s been such a noticeable influx of capital from a particular group of investors,” Sernau said.

As a result of China’s loosening of restrictions, the pool of Chinese investors in New York is also getting more diverse, sources said.

Joel Rothstein, an attorney at Paul

Firm Source: Dollar figures from Real Capital Analytics and TRD research. Includes all known closed and pending purchases of both properties and development sites in the five boroughs between 2013 and last month.

Hastings who splits his time between the U.S. and China, predicted that Chinese private equity will soon start flowing into New York. Until now Chinese regulations have prohibited those players from making Wendy Cai-Lee investments abroad.

Finding financial freedom It’s hard to overstate the impact that changing domestic policy in China is having on New York real estate.

Those institutional Eric investments are only poised Horvat to grow. Last year, the Chinese government took steps to streamline the complex set of approvals necessary for all outbound investment.

For example, investments under $300 million can now Min be registered on a provincial Chan level, rather than with the central government.

“Before this change, [investors] would spend six months just waiting for approval. Now, for some of the investments, it’s one month,” said Ming Liu, research manager at Cushman’s office in Beijing. “It’s quite great.”

Coupled with money traversing the globe at the speed of email, more Chinese players are feeling the pressure to get their money out of their homeland. “It’s hard to make investments domestically,” because of China’s economic slowdown, said Liu. “But [investors] are also full of cash, looking for opportunities.”

Insurance companies, in particular, grew 13 percent between 2008 and 2013 and are now flush with new cash, according

to the global commercial brokerage CBRE. That growth is largely the result of China’s expanding middle class. Since 2012, when the Chinese government raised the limit for how insurance companies could invest overseas, the firms have become voracious buyers of real estate.

In the past year, major Asian insurance companies like Anbang and Sunshine made their first forays into real estate in New York.

Looking ahead, Asian insurance funds are projected to increase their real estate investments abroad by $75 billion, to the tune of $205 billion in 2018, according to CBRE. New York developers and property owners are already gaining in a big way, thanks to the aggressive bids from Chinese buyers that have helped to push up sale prices.

“They’ll accept a lower rate of return for being in the New York market, which gives them an advantage.

They’ll pay more, for good reason, than a private equity firm or investor will with a fiveto 10-year horizon,” said Jay Neveloff, chair of the real estate practice at Kramer Levin Naftalis & Frankel. “It’s a great strategic move that gives them a significant advantage in buying properties.”

In many cases that long-term investment strategy has given them a leg up against competitors in New York, particularly private equity firms and REITs. For example, Fosun outbid several others in its $725 million acquisition of One Chase Continued on page 126

www.TheRealDeal.com March 2015 41

FOREIGN INVESTMENT

A window into

From the overnight negotiations to concerns over espionage,

I

BY E.B. SOLOMONT t was a deal no one saw coming when a little-known Chinese insurance company burst onto the scene this fall to buy the iconic Waldorf Astoria for nearly $2 billion.

But it turned out to be the largest-ever Chinese investment in a single Manhattan property, and one that sources described as a “chairman to chairman” deal, negotiated at the highest levels.

Sources said that Anbang Insurance Group’s Chairman Wu Xiaohui reached a deal directly with Jonathan Gray, head of real estate at the Blackstone Group, the powerful private equity firm that holds a majority stake in the Waldorf ’s parent company Hilton Worldwide. (Gray is also Hilton’s Chairman.)

The pair “met several months ago, [and] began discussing ways in which they could do business,” said Robert Ivanhoe, chairman of Greenberg Traurig’s global real estate practice, one of several law firms which represented Anbang in the deal. “Of course, the Waldorf Astoria came to mind as one possibility, and the basic business terms of the transaction were negotiated directly between the two chairmen.”

WALDORF ASTORIA

Wu, for his part, outlined his interest in New York real estate and offered a glimpse into his investment strategy during a Jan. 31 talk at Harvard University. “How do we make good investments?” he asked, according to a transcript obtained by The Real Deal. “Our investment guidelines are [price to book] under 1,” he said, using a ratio that describes undervalued assets, “and [return on equity] over 10.”

“That’s our bottom line,” Wu said, during the company recruitment event hosted by the Harvard China Forum, a student-run group.

Anbang’s “thorough analysis” of the market appears to have prompted the company’s decision to convert the top floors of the Waldorf into luxury residences. “A comparable residential renovation project is the Plaza Hotel, New York, which has already made lucrative returns with a proven business model,” Wu said.

Below is a blow-by-blow account of some of the key moments that led to the sale of the 1,413-room hotel that’s housed everyone from world leaders to U.S. presidents to entertainment icons.

Anbang’s Wu Xiaohui flew to New York three or four times during a two-week period to handle direct negotiations with Blackstone’s Jonathan Gray in what sources described as a “chairman to chairman” deal.

3. In the middle of the credit crunch, Hilton struggles under a staggering $20 billion of debt. Blackstone invests another $800 million.

Chairman Wu Xiaohui

2004

2005 2006

1. Wu launches Anbang with $75 million of seed capital from two stateowned companies, the oil company Sinopec and automaker Shanghai Automotive. The politically connected founder is married to the granddaughter of the late Chinese leader Deng Xiaoping, who has been called the “architect of modern China.” Within 10 years, the company has $114 billion in assets and 30,000 employees, according to its website.

42 March 2015 www.TheRealDeal.com

2007 2008 2009 2010 2011 2012

2. Blackstone buys Hilton for $26 billion, in one of the largest leveraged buyouts at the time. Over the next six years, Hilton spends $175 million renovating the famed Waldorf, which was opened in 1931 by the Astor family and taken over by Conrad Hilton in 1949. Famous guests include President Herbert Hoover and Marilyn Monroe.

4. China eases rules on foreign investment by its insurance companies, opening the floodgates for Chinese investment overseas.

Jonathan Grey

the Waldorf sale FOREIGN INVESTMENT

a blow-by-blow account of Anbang’s $2B deal to buy the iconic hotel

Robert Ivanhoe

FEB. 27, 2014: 6. As Hilton looks for ways to make more money off the Waldorf, CEO Christopher Nassetta says all options are on the table. “We will fix the Waldorf,” he pledges during a fourth-quarter earnings call.

Later in the day, he confirms that a sale is possible.

SEPT. 1, 2014: 10. By Labor Day, Gray and Wu agree on the basic sale terms. “The price was one thing that was agreed to and it never changed,” Ivanhoe said. But the deal must close fast in order to meet Blackstone’s self-imposed deadline of September 18. “They were giving Anbang a preemptive run at this before it hit the market,” Ivanhoe said.

Potential buyers, he said, “were calling Jon Gray … Blackstone wanted to give Anbang what they thought was a fair period of time to get it done, and if not, put it on the market.”

AUGUST 2014: 8. Hilton hires Eastdil Secured to prepare for a sale, in case the deal with Anbang falls through.

2013

SEPTEMBER 2014: 13. Despite the fact that the Waldorf is not yet on the market, Anbang is not the only bidder. Two other contenders also reportedly offer near $2 billion. While sources describe Anbang as aggressive, Wu says his acquisition strategy is “friendly.” “We will back out whenever there is any opposition from stakeholders,” he says.

SEPT. 8, 2014: 12. Negotiations between Anbang and Blackstone kick off in earnest in New York.

Anbang’s team works around the clock because of the 13hour time difference. Wu flies to New York three or four times during a two-week period to handle direct negotiations with Gray over several meals, including lunch at Blackstone’s 345 Park Avenue headquarters.

OCT. 6, 2014: 17. Hilton announces the sale of the Waldorf for $1.95 billion, or $1.4 million per room. The price is a whopping 32 times the hotel’s $61 million earnings before interest, taxes, depreciation, and amortization (or EBITDA), according to the annual report.

Nassetta says that Anbang will undertake a “major renovation” of the Waldorf.

LATE SEPTEMBER 2014: 15. During late-stage negotiations, the deal is nearly derailed over the length of Hilton’s management agreement at the Waldorf. While Anbang offers a 75-year deal, Hilton wants an even longer agreement, since the Waldorf is one of its namesake brands. Following a particularly tense night, Wu and Gray step in and keep the deal alive, recalled Ivanhoe.

Ultimately, Anbang agrees to 100 years. In exchange, Hilton discounts its management fee. “[It] took three long days,” Wu says. “The two parties negotiated until 2 a.m. every night during those days before finally achieving a win-win result.”

2014

DECEMBER 2013: 5. Bolstered by Blackstone, Hilton goes public, raising $2.35 billion in one of the biggest IPOs in the U.S. hotel industry, and valuing Hilton at around $32 billion. The private equity firm makes $8.5 billion on its investment.

MARCH 2014: 7. Gray and Wu meet to discuss Anbang’s possible investment in a Blackstone private equity fund. But their conversation quickly turns to the possibility of Anbang buying the Waldorf.

FEB. 1, 2015: 20. In Washington, U.S. regulators green light the deal.

Somewhere in Manhattan, the 33 lawyers let out a collective cheer.

JAN. 31, 2015: 19. Despite the regulatory review, Wu remains undeterred. At Harvard, he discloses plans to convert the Waldorf’s two towers into “luxury residential apartments” modeled after the Plaza’s conversion. “A potential buyer needs to have more than money to qualify for our apartments,” he said. Wu adds that Anbang will renovate the hotel — with the possible addition of a “highclass Chinese cuisine” restaurant.

During the talk, he invites students to enjoy a free tea at the Waldorf on Anbang’s dime; if they take jobs at Anbang, they’ll also get a free stay when they get married.

2015

SUMMER 2014: 9. Anbang’s team crunches numbers using three main criteria: Is the business model profitable?

Is cash flow sustainable?

Can the investment generate risk-adjusted returns? “We found [the] Waldorf to meet our triple investment standards,” said Wu during his January talk at Harvard. Not only was the Waldorf relatively cheap compared to Beijing prices, but the Elad Group’s redevelopment of the iconic Plaza Hotel boosted Anbang’s confidence.

Peninsula Hotel

SEPT. 4, 2014: 11. Anbang holds several rounds of interviews before hiring three legal teams to negotiate the deal; Wu conducts personal interviews with finalists, including one round at the Peninsula Hotel, where Anbang’s team is staying. “They had never purchased a U.S. asset,” Ivanhoe explained.

MID-SEPTEMBER 2014: 14. Lawyers hammer out the deal’s finer points at the Times Square offices of Skadden, Arps, Slate, Meagher and Flom, one of the firms representing Anbang.

The insurer has 21 lawyers on its team in total. Hilton has nine on its side (from Dentons as well as Simpson Thacher & Bartlett) while three Gibson Dunn lawyers are also present as outside compliance counsel.

“Everyone was apprehensive at how it would work out at first; it turned out to be a fine partnership between three different firms,” Jonathan Mechanic, chairman of Fried Frank’s real estate department, another of Anbang’s firms, told Bloomberg News. Lots of coffee was no doubt consumed.

OCT. 2, 2014: 16. Anbang signs a contract to buy the Waldorf and makes a $100 million cash deposit, which is held in escrow, according to Hilton’s annual report.

OCT. 13, 2014: 18. The deal hits a major snag when U.S. regulators launch a review of the sale, hinting at concerns that the company’s renovation could lead to eavesdropping capabilities and cyber-espionage at the Waldorf. (The American ambassador to the United Nations has an apartment there and it’s where U.S. diplomats stay every September for the U.N. General Assembly.)

The review causes a “firestorm,” recalls one source, as some stakeholders became “skeptical” the deal would close.

FEB. 11, 2015: 21. Ten days later, the sale closes. Hilton pockets $1.34 billion after paying off a $525 million loan. At a closing celebration at the Waldorf, Gray makes a champagne toast and presents Anbang executives with fine China dishes from the original Waldorf hotel. Wu says of Gray, “Our relationship developed gradually from negotiation counterparties to close friends. I trust him deeply because he keeps his word….

He doesn’t waste any time.”

FEB. 19, 2015: 22. Anbang doesn’t waste time either. In its second New York City purchase in five months, the company decides to buy the 26-story office tower at 717 Fifth Avenue. The seller? Blackstone. TRD www.TheRealDeal.com March 2015 43

FOREIGN INVESTMENT

DIGGING TO

CHINA W

A look at the army of gatekeepers, from wealth managers to lawyers, funneling Chinese deals to NYC players

BY E.B. SOLOMONT as well as to bankers at other institutions, who did the same. hen Sotheby’s International Realty’s Nikki Field travels to China, she lines “After they met me, the next trip they had queued up 12, 15, 20 people to meet,” Field said. up back-to-back meetings with wealthy Chinese buyers looking to purchase (A year and a half ago, Field wooed Chang over to Sotheby’s, where he now works on her team, New York real estate. leading the Asia desk.) Last year, Field’s team sold $300 million of Manhattan real estate — Field has not only tapped her firm’s affiliated auction house to make more than 75 percent of which went to foreign buyers. A full quarter of those foreign buyers introductions to wealthy Asian art collectors, but has also mined her own network of banking were Chinese. friends to link her to Chinese clients eyeing purchases of New York real estate.

“If you’re not targeting Asian buyers, you should be,” she said. “They’re spending far more Kevin Swill, chief operating officer at the Manhattan-based real estate investment firm money than your American buyer.”

Carlton Group, also packs his schedule when he travels to China.

Field said she has a half-dozen clients looking to spend between $200 million and $1 On a recent three-week trip to Asia, with stops in Beijing, Seoul, Shanghai and Hong Kong, billion on New York real estate.

Swill attended a stunning 47 meetings where he discussed potential deals. Those meetings One client, Cheerland Investments, just threw a banquet-style party to celebrate hitting a — with insurance firms, individual investors and private equity firms — took place in offices total of $800 million in New York real estate investments in 2014. Those purchases included and over traditional Chinese meals of Peking duck, whole fish, grilled eel and boiled frogs.

550 West End Avenue and 287 Park Avenue South. While Field’s team did not broker those Carlton also hosted two large receptions for potential investors, one in a reception hall in sales, Field said she advised Cheerland on residential purchases and introduced the firm to Singapore and the other at a Hong Kong hotel ballroom.

New York developers.

“You can’t just call up someone in Beijing and say, ‘I have this great deal, can you invest?’”

Cheerland, according to sources who attended the party, is looking to deploy upwards of Swill said by phone from his hotel room in Hong Kong. “It doesn’t work.” $1.5 billion in New York real estate in 2015.

While Chinese investors are sending billions of dollars into the New York real estate market annually — with more investors anxiously looking for deals — industry players in Working wealth managers the residential, commercial and development worlds here still need to connect with the right Making inroads with the right intermediaries is key for both connecting with Chinese financial gatekeepers if they want to get access to that cash. Last year, Chinese investors spent spenders and navigating the complex system of getting money out of China and into the $3.35 billion on New York City real estate.

United States.

That was up 43 percent from the year before, In China, the government has stringent “If you’re not targeting Asian buyers, you and shows no sign of slowing. rules for exchanging currency and obtaining Gatekeepers for Chinese money include approval for overseas investment — rules that should be. They’re spending far more money an army of bankers, lawyers, brokers and can stop a deal dead in its tracks. than your American buyer.” wealth managers based in New York, “The first question is, ‘how are you going Nikki Field, Sotheby’s International Realty Beijing, Shanghai and Hong Kong. In to do your money?’” said Shang Dai, founder addition, investment teams at major Chinese of the New York-based Kuafu Properties, “You can’t just call up someone in Beijing companies, insurance firms, banks and statereferring to how investors are going to deal owned entities are on the hunt for deals to with financial regulations. and say, ‘I have this great deal, can you recommend to their higher-ups.

For starters, many upwardly mobile and invest? It doesn’t work.”

“It’s a beautiful machine of people high-net-worth Chinese citizens rely heavily on Kevin Swill, Carlton Group helping to target, identify and capture their wealth managers for advice on how to diversify next investment,” said Field, who has been their personal savings. A big part of that finanbuilding her Rolodex in China since 2008. cial planning increasingly includes a residential Setting up meetings in China “shows you’re One of the key connections she made along property in New York, which not only serves as very serious. It’s about having a presence and the way was with HSBC’s Daniel Chang, who a solid financial investment and place to park showing you’re not just sitting in New York.” was helping manage the bank’s relationship cash, but also as a residence for families with Lindsey Stokes, Town Residential with high-net-worth Chinese clients. Chang a child who might come to the U.S. for school. introduced her to dozens of potential clients, Continued on page 124

44 March 2015 www.TheRealDeal.com

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BY THE SEA

REAL ESTATE

AND

POLITICS

THE INFLUENCE TRADERS A look at some of the biggest lobbying firms representing real estate players in City Hall and Albany

T

BY RICH BOCKMANN he federal charges against former State Assembly Speaker Sheldon Silver provide a window into the inner workings of a cast of characters, ranging from a cancer researcher at Columbia University to a parade of lawyers. But also mentioned in the complaint are lobbyists, who roam the halls of the state capitol and play an outsize role in what legislation gets passed and which projects get green-lighted.

The complaint against Silver, which was brought by U.S. Attorney Preet Bharara (see related story on page 52), outlines how lobbyists served as the middlemen, going back and forth from the now-disgraced Assembly speaker, to a law firm that was allegedly paying him kickbacks and a pair of unnamed real estate developers, one of whom was since identified in the media as Glenwood Management’s Leonard Litwin.

Meanwhile, the New York Post identified Litwin’s lobbyist as 63-year old Brian Meara, an Albany power broker whose ties to Silver date back to the 1970s, when they worked together in Manhattan Civil Court. Between 2007 and the first half of 2014, Glenwood paid Meara’s firm $745,000 in consulting fees, according to lobbyist disclosures with the state Joint Commission on Public Ethics.

And while Meara’s influence is undeniable, he is but one of thousands of lobbyists in Albany and Manhattan.

The real estate and construction industries spent $166.3 million on lobbying on the state and city levels from 2007 through the first half of 2014, according to a review by The Real Deal of the disclosures, the most recent available.

That was 12.5 percent of the $1.3 billion spent on lobbying during that time period — and second only to the health and mental hygiene industry, which poured $227.9 million into lobbying.

It’s also clear from the disclosures that real estate firms, like companies in other industries, often hire multiple lobbying specialists at the same time, depending on the projects and policies they are pushing for.

One developer, who spoke on the condition of anonymity, said that what lobbyists provide is access, and a client chooses a lobby shop based on who has the best relationship with the official whose approval they seek.

“They have the access because they know the electeds.

They can get developers in front of them,” the developer said. “Once you’re in to talk to the elected, it’s all up to

Related has Jay Kriegel, a former television executive and public relations specialist who served in Mayor John Lindsay’s administration, and Charles O’Byrne, who served as chief of staff to Gov. David Patterson.

And at the Durst Organization, Jordan Barowitz, formerly the top spokesperson for the Bloomberg administration, is the point person when it comes to pushing the company’s projects with the city.

Barowitz, Durst’s director of media relations and government affairs, ushered the company’s 709-unit West 57th Street “pyramid” rental building through the city’s Uniform Land Use Review, for instance, and is working on a proposed development at Hallets Point in Queens.

Even the Real Estate Board of New York — the industry’s chief lobbyist itself — outsources some of its lobbying to law firms, including Wilson Elser Moskowitz Edelman & Dicker, which has offices in both Manhattan and Albany, and government relations specialists 99 Solutions.

Below is a look at some of the biggest lobbyists representing real estate players in the halls of City Hall and the state Capitol.

The real estate and construction industries spent a massive $166.3 million on lobbying the state and city from 2007 through the first half of 2014. The only industry that spent more was health care.

48 March 2015 www.TheRealDeal.com

the merit of what you’re seeking. [Lobbyists] are just getting you in the door.”

And in addition to hiring outside lobbying firms, most of the city’s biggest landlords — Vornado Realty Trust, Tishman Speyer and Related Companies, to name a few — have inhouse lobbyists and government affairs experts of their own.

Many of the staffers in those jobs have worked for the city or state in the past and are plugged into the inner workings of the legislative process and, of course, the key players.

At Forest City Ratner, for example, the person running the external affairs department is Ashley Cotton, a former campaigner for Andrew Cuomo’s attorney general bid who went on to work for the New York City Economic Development Corp. and the Bloomberg administration.

Kasirer Consulting Suri Kasirer’s eponymous firm has been the top-grossing lobbying shop in the city for a decade. The firm raked in $3.7 million from real estate clients alone in 2013 and the first half of 2014 — more than any other industry lobbyist in the city or state.

Kasirer rose to prominence during the Bloomberg years representing real estate players like SL Green and the Elad Group, along with mega-clients like Cemusa, the Spanish firm that was awarded a $1 billion-plus contract to build new bus shelters.

ILLUSTRATION FOR THE REAL DEAL BY PHILIP CHUDY

REAL ESTATE

AND

POLITICS

And in addition to lobbying, she has also established Patricia Lynch Associates Constantinople & Vallone has lobbied on behalf of In Albany, Patricia Lynch is a known lobbying Hidrock Realty’s 320-room hotel at 133 Greenwich Street. herself as a formidable fund-raiser, most notably for Bill powerhouse. And like her counterparts, she too Other real estate clients include Sheldon Solow’s Solow Thompson, a former city comptroller and mayoral got her start in the land of legislators. candidate.

Management, Bizzi & Partners and the Sapir Organization.

She worked as a top aide to a pair of Sources say she’s dogged on behalf of her Like the council, the firm is something of a family members of Congress before heading to clients, which also include Vornado and Related. affair, too.

Albany, where she was communications Kasirer told TRD real estate is “maybe 50 Vallone’s son, Perry, is a company principal. He director for the now-embattled Silver for previously worked in the real estate division of New percent of our business,” and said that the firm most of the 1990s. specializes in guiding developers through Jersey law firm Greenbaum Rowe and Smith and later Lynch launched her firm in 2001 and, as an in-house attorney for the national homebuilder K. ULURP. as the New York Times noted in 2010, has Hovnanian Homes.

In recent years, Kasirer lobbied on had “a hand in virtually every significant behalf of Cornell University in its successful legislative issue in recent years.”

Connelly, McLaughlin & Woloz bid to build a tech campus on Roosevelt On the real estate front, she played a The three named partners in this outfit are either former Island and for Forest City Ratner’s Atlantic major role in killing the New York Jets’ journalists or spokespeople, so it makes sense the firm is a Yards development in Brooklyn. proposal to build a football stadium on hybrid of a public affairs-lobbying company and a publicThe company is also advising the HowSuri Kasirer, president Manhattan’s Far West Side and helped relations firm. ard Hughes Corp. on the highly anticipated secure a huge public works contract to The company, which is headquartered in the Woolworth and controversial plan to redevelop the South Street replace the Tappan Zee Bridge. The firm counts Building across the street from City Hall, employs six Seaport and surrounding area in Lower Manhattan.

Vornado, Related and Thor Equities as clients. specialists and logged $626,000 in business from real estate She is also one half of a political powerhouse But Lynch’s business has taken a hit over the last year. marriage: Her husband, Bruce Teitelbaum, served past few years amid ethics and tax tangles, and Principal Michael Woloz, who worked under Vallone Sr., as Mayor Rudolph Giuliani’s chief of staff. insiders are now wondering if her influence will said the firm’s two-pronged approach is especially helpful Her team, she said, consists of three senior wane with Silver out of power. when it comes to dealing with large and complicated real lobbyists, two junior staffers and two supporting The firm brought in $1.5 million from estate projects. employees. real estate in 2013 and the first half of “I’d say almost any real estate project in New York City Kasirer’s own career stretches back 2014, but overall her business was down a has some element of controversy to it, because there are to her days as a special assistant to little more than 20 percent between 2012 communities to work with and concerns to address,” he said. former Gov. Mario Cuomo and she said a and 2013.

“We’re able to put all the pieces together in that sort of public background working in government is key In 2010, affairs context,” Woloz said. to being an effective lobbyist.

Michael Woloz, Partner she agreed The firm’s real estate “I only hire people who have been to pay the division is headed by in government and politics at a senior state $500,000 after Kathleen Cudahy, who level,” she said. then-Attorney served as legislative counsel In 2009, Kasirer addressed the lobbying General to the City Council speaker industry’s “bad rap.”

Andrew Cuomo and as a policy advisor and “Some of the perception of what lobbyists do accused her of strategist in Bloomberg’s is that they’re sitting in a smoke-filled back hall providing gifts 2001 campaign for mayor, making a deal giving some kind of quid pro quo and campaign according to her bio on the for the special interests,” she said. “The reality is, ED WALLACE, GREENBERG TRAURIG contributions to firm’s website. Her profile nobody is going to support your project as a favor Comptroller states she’s managed real to you. These things are too complicated, Alan Hevesi in return for favorable estate accounts including Vornado, RFR, Chetrit Group, and there’s too much at stake.” policies on pension fund investments for and Stellar Management. She also lobbied on behalf of Kathleen Cudahy, attorney her clients. (Hevesi served 20 months in Tishman Speyer, as it dealt with pushback from Stuyvesant Capalino & Company prison as part of a kickback scandal involving Town tenants when the company attempted to deregulate Jim Capalino earned his political chops under the state’s pension fund.) rent-stabilized apartments.

Ed Koch, working in Koch’s congressional office, on his In recent years, the IRS hit Lynch’s firm with at mayoral campaign and in his administration, as comleast three tax liens for unpaid federal payroll taxes Geto & de Milly missioner of the city Department of General Services. totaling about $1.5 million. Lynch did not respond Another hybrid firm, Geto & de Milly, specializes in lobbying But he had a foot in the real estate world, too. In to requests for comment. and media strategy. the mid-1980s, while Koch was still helming the city, The Fifth Avenue–based company was founded by Ethan Capalino did a three-year stint as a broker at the comGeto, who worked with former Bronx Borough President Constantinople & Vallone mercial firm Edward S. Gordon Company, which and state Attorney General Robert Abrams, along with Consulting later became CBRE in New York. He would His name may get second billing, but Peter Michelle de Milly, the media specialist who worked at the go on to partner with Forest City Ratner and Vallone Sr. carries serious political clout as forerunner to the state’s Empire State Development Corp. later head operations at AJ Contracting.

The company worked to gain community support and the longtime former City Council speaker His Manhattan-based firm, Capalino & — and the patriarch of a political dynasty lobby on behalf of Zeckendorf Development for 15 Central Company, founded in 2000, employs nearly Park West and guided Toll Brothers through ULURP for in his home borough of Queens. two dozen lobbyists, including a real estate Jim Capalino, CEO Not only did he serve as the first Council its proposed 450-unit condo project in Gowanus, later practice headed by former Cassidy Turley speaker from 1986 through 2001, but his picking up the Lightstone Group as a client when it took vice president Tim Kucha. The company brought in $2.9 million from real estate in 2013 and the first son, Peter Vallone Jr., served there from 2002 through over the development and changed course with a planned 2013. His grandson, Paul Vallone, is now a member of the 700-unit rental. half of 2014, public filings show.

David Von Spreckelsen, president of Toll Brothers City The firm represents Argent Ventures, the landlord of Council as well.

Living, said that once the City Planning Commission is The eldest Vallone and partner Tony Constantinople Grand Central Terminal, in regard to air rights matters and the proposed East Side rezoning, as well as Atlas Capital in run a firm of seven out of their office in Manhattan. The receptive to an idea, the most important person to convince its plans to develop the St. John’s Terminal building in Soho. firm, which brought in $1.3 million from real estate during is the local Council person, who at the time was Bill de Blasio.

Geto & de Milly “had the trust of de Blasio, the commuLast year, the company represented the Fortis Property the 2013–2014 time period, has a strong Queens base, with Group in its unsuccessful bid to redevelop Brooklyn’s Long clients including construction contractors TA Ahern of nity board and the other local elected officials.”

“Our approach is to convert the traditional community-developer tennis match into a quilting bee.”

Island College Hospital.

Woodside and Mega Contracting of Astoria.

Continued on page 116

www.TheRealDeal.com March 2015 49

REAL ESTATE

AND

POLITICS

Albany’s real estate agenda, sans Silver

Issues to watch as state lawmakers scramble to organize in the wake of speaker’s downfall

The new lineup of the “three men in a room” who make most of the decisions in Albany: Gov. Andrew Cuomo, Speaker Carl Heastie and Senate Majority Leader Dean Skelos.

S

BY TESS HOFMANN heldon Silver’s resignation from his post as speaker of the Assembly, after 21 years as one of state government’s three most powerful men (its oft-criticized modus operandi), left a gaping hole in the center of Albany.

Where once stood a man seen as a reliable tenants’ ally and an expert deal broker, now stands a question mark.

Even more disorienting, revelations since Silver’s arrest on Jan. 22 are forcing tenants’ activists to reconsider whether they ever had an advocate, or merely the appearance of one. The indictment alleges that Silver lined his pockets by helping real estate interests seek tax abatements. (See related story, page 52.)

“What we know now that we didn’t know a year ago is, that Silver is on the payroll of a large real estate interest, and was not just the defender of the common man and of rent stabilization,” said John Kaehny, executive director of government watchdog Reinvent Albany.

Silver’s replacement as speaker, Carl Heastie, said that strengthening New York City’s rent regulations is the Assembly’s first priority this year. However, Blair Horner, legislative director at the New York Public Interest Research Group, said Heastie has not had time since winning the Speaker post early last month to unify the Assembly on tenants’ issues, a fact that could help landlords. “If you’re a lobbyist for the real estate industry, you might find [Assembly members] more sympathetic now than you would have,” he said.

It will likely take a lengthy trial to peel back all the layers of Silver’s layers. But while the state is reeling, a session jam-packed with important real estate issues is unfolding in Albany, and it’s anything but business as usual.

Here are some legislative items to keep an eye on for the current session:

The budget

G

ov. Andrew Cuomo’s 2015-16 budget proposal includes $1.7 billion in proposed tax credits for homeowners and renters, based on a formula that limits property tax burden according to income. Kaehny said that because this proposal is a new concept for the majority of New York State, it isn’t garnering much attention from groups with an established interest. Last year, a similar “circuit breaker” tax plan was passed for New York City only. The measure is largely supported by the Democratic-majority Assembly and has been advanced by various members of the Republican-controlled Senate in the past, though the

50 March 2015 www.TheRealDeal.com

upper chamber as a whole has not made clear whether it will support the plan this time around.

The budget also sets forth the idea of modernizing the state’s airports, which are consistently ranked among the worst in the country, and spending $450 million to build an AirTrain to LaGuardia Airport that would connect to the subway and Long Island Rail Road at Mets-Willets Point Station. Some say the plan is questionable because no one exactly knows how much the train line would cost the Port Authority and the underfunded MTA. Susan Lerner, the executive director of Common Cause, called the AirTrain proposal a classic example of an issue that will be decided by “three men in a room,” with Heastie now taking Silver’s place.

Rent regulations

I

n 2011, when the current rent laws were modified and extended, Silver issued a press release framing it as a victory for housing advocates and the public. “This measure, while not all that we pushed for, is a huge relief for tenants and a significant improvement over what is currently in place,” he said. That spin is now being questioned due to a section of the government’s case against Silver that says prior to the Rent Act of 2011’s passage, Silver met with the phantom “Developer 1” (believed to be Glenwood Management’s Leonard Litwin) and ultimately incorporated many of the developer’s suggested changes in the law’s language.

optimistic, but it’s too early to tell if Heastie can be hold sway on the issue. Real estate attorney Adam Leitman Bailey, who believes the current system of rent regulation is broken, said, “The question with Heastie is, does he have the ability to galvanize the electorate? Or will they be frozen?”

Tax abatements

B

oth the 421a and J-51 programs, among others aimed at developers, are set to expire in June, and questions are swirling around their renewal. Some feel that Silver’s arrest has added to the stigma around 421a, because a portion of the alleged kickbacks that Silver was receiving came from referring real estate clients seeking 421a abatements.

Maier’s view illustrates this point. “Now we have a really shining example showing this is why we have the 421a program. It’s because of money in Albany,” she said. “There really is no public benefit.”

The 421a program was conceived as an incentive for developers to build on unused or underutilized land, and was augmented in 2008 to include a requirement that 20 percent of units receiving the abatement be affordable. But the perception of those public benefits is increasingly turning toward a view that the program is largely subsidizing luxury condos like Gary Barnett’s One57 and Joseph Sitt’s mixed-use 520 Fifth Avenue. “As an accountant, I would suggest [Heastie] can do the math. I think anybody can see

“If you’re a lobbyist for the real estate industry, you might find [Assembly members] more sympathetic now than you would have.”

BLAIR HORNER, NEW YORK PUBLIC INTEREST RESEARCH GROUP The current rent regulations expire June 15, and while they are expected to be extended in some regard, the particulars are up in the air. Of major concern this year is high-rent vacancy deregulation. “The most important thing to tenants this year is [repealing] vacancy deregulation,” said Ilana Maier, program director for the Metropolitan Council on Housing. Vacancy deregulation allows landlords to remove apartments from rent regulation if they become vacant and the legal regulated rent reaches $2,500. “It’s not just about losing units. There’s a huge incentive to harass tenants out of the buildings,” Maier said.

Maier said that Heastie has been talking the talk of a tenants’ rights advocate and advocates are cautiously

that 421a isn’t a good deal for New York,” said Ron Deutsch of the Fiscal Policy Institute, an Albany-based nonpartisan research group.

Democratic political strategist Hank Sheinkopf said the industry should expect to see changes in the program, but not big changes. “With the constant talk of investigations swirling around it, it will probably keep things static, because politicians are risk averse,” he said.

The final results may well be a tradeoff between the separate-but-related issues of rent regulation and real estate tax abatements, as the two are perpetually held up as counterweights. According to Kaehny, “That’s how everyone in Albany sees it.” TRD www.TheRealDeal.com January 2014 35

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REAL ESTATE

AND

POLITICS

Who’s Preet coming after next?

The Manhattan U.S. attorney has promised that his investigation will not stop at Sheldon Silver, leaving many in the real estate industry uneasy

BY ADAM PIORE oliticians are supposed to be on the “people’s payroll,” U.S. Attorney Preet Bharara told a crowd of lawyers the day after unveiling an explosive series of criminal charges against former State Assembly Speaker Sheldon Silver.

“They’re not supposed to be on retainer for the wealthy special interests they do favors for,” he said.

Bharara never specified which “special interests” he was referring to. But his complaint against Silver makes clear that the New York City real estate industry is at the top of that list and will probably play a starring role if the case ever goes to trial.

And, he said, his investigation is far from over.

That warning, sources said, has those in the industry uneasy. Even those who haven’t done anything illegal may well get swept up in Bharara’s expanding investigation.

“The Silver indictment and investigation has important political players in Albany on edge and it has the real estate industry in New York City on edge,” said John Kaehny, executive director of Reinvent Albany, a group that advocates for more government transparency. “Where it goes nobody knows.

He’s got everybody’s attention.”

As the public now knows, the charges against Silver cite two unnamed developers — one of whom has been identified in the press as Leonard Litwin, the 100-year-old CEO of Glenwood Management. Both Litwin and “Developer 2” hired the law firm Weitz & Luxenberg, which the complaint says paid Silver referral fees that the ex-speaker did not properly disclose.

Those payments are now at the very core of the case. They were made, as the complaint points out, while the extension of the 421a tax break, which saves city real estate players $1 billion annually, was before the Assembly.

If any other industry players are so much as brought in for questioning — and sources say that’s likely — they will be dealing with a dogged prosecutor who, during his six years as the U.S. attorney for the Southern District of New York, has never shied away from big targets. Even some of his staunchest adversaries grudgingly said he’s doing a solid job.

“His office is highly competent,” said attorney Jerry Shargel, who defended former state Sen. Malcolm Smith after Bharara charged the one-time rising political star of trying to rig the New York City mayoral election. (Smith was convicted last month and will be sentenced in July.)

“There is always the familiar complaint [about Bharara] from defense lawyers about too much publicity and being interested in a different political office in the future,” Shargel. “But, look, he is doing a very good job. If

P

52 March 2015 www.TheRealDeal.com

a person is holding the top law enforcement office, I don’t think being aggressive is cause for condemnation.”

A Pandora’s Box As U.S. attorney, Bharara oversees more than 200 lawyers, prosecuting some of the nation’s most high-profile cases.

He has compiled an impressive record of

hardly touched the real estate industry.

Bharara’s most high-profile New York City real estate case to date involved the Iranian government. Bharara forced the forfeiture of a 36-story office building at 650 Fifth Avenue from entities that served as a front for the Iranian government.

But the case against Silver opens a new Pandora’s Box, observers said.

ate affordable housing, economic growth, jobs, and tax revenue,” the statement said.

Still, that didn’t stop sign-waving protesters from demonstrating against the tax breaks outside Extell’s One57 last month.

The indictment, which was handed up by a grand jury last month, doesn’t mention 421a by name. But it refers to representatives for Developer 1 meeting with Silver

Preet Bharara, the U.S. Attorney for the Southern District of New York, may have the real estate industry in his sights.

“Whenever corruption is on the rise, that means democracy is on the decline. That means that law enforcement will use every single means at our disposal: wiretaps and undercover agents and stings.”

PREET BHARARA, MANHATTAN U.S. ATTORNEY wins, including more than 85 convictions on insider trading alone, though some have since been overturned. Among his targets have been big-time hedge funders, including the billionaire founder of the Galleon Group, Raj Rajaratnam, and several former traders from Steve Cohen’s SAC Capital Advisors.

Yet over the course of a headline-heavy tenure as the Southern District’s top federal prosecutor, Bharara — who was appointed

by President Barack Obama in 2009 — has

The key allegations cut straight to the heart of some of the industry’s high-priority interests. In the charges against Silver, Bharara explicitly refers to the 421a program, which big-time players like Extell Development and Silverstein Properties have controversially been granted for luxury buildings.

Through a spokesperson, Extell defended the credits. “Economically, in both good times and bad, the 421a program has been a key component to the public policy to cre-

to discuss “certain government subsidies, programs and tax incentives.”

It also notes that Silver backed legislation favorable to Developers 1 and 2, which included “but is not limited to” proposals made by Glenwood’s lobbyists “with respect to the Rent Act of 2011.” The 421a extension was included in that law.

Mike McKee, of the tenants activist group Tenants PAC, said that Silver’s “pro-landlord” positions in that bill went beyond supportwww.TheRealDeal.com January 2014 35

PR O F I L E ing 421a, including provisions for moving rent-stabilized apartments to market rate.

“We’ve wondered for years why Silver sold us out,” McKee said. “Now we know.”

Good government groups say the 421a tax breaks are an obvious place to look for corruption, given the small slice of special interests that benefit from it.

“This is a straight-up public subsidy to the real estate industry,” said Reinvent Albany’s Kaehny.

“It has grown so large only because of the massive amounts of money the New York City real estate industry gives to state and city politicians,” he added.

As such, it did not take long for the media to trace Bharara’s description of “Developer 1” back to Glenwood’s Litwin.

Developer 1, Bharara wrote, “has contributed more than $10 million for candidates for state office and state political committees” since 2005, including $200,000 to Silver and a political committee he controls. Developer 1 also “in or about 2014 paid approximately $900,000 to eight different lobbyists … to lobby state government officials, including Silver.”

Though Litwin has not been charged with any wrongdoing, he and his firm are likely to feature prominently if the case moves to trial. Glenwood declined to comment.

Bharara provided little detail about “Developer 2,” beyond noting that the developer also lobbied Silver and had been asked by the speaker to hire the law firm run by his former counsel, which then paid him a fee.

every single means at our disposal: wiretaps and undercover agents and stings.”

What that means for the developers and lobbyists who might end up ensnared in the dragnet is yet to be seen. But those who know Bharara say he is not one to kowtow to anyone.

and his head always in a book, Vinit said.

Their father instilled a strong sense of ethics. “He was just a very stern guy. He doesn’t drink, he doesn’t smoke, and he’s very disciplined. He was all about the grades and making sure that we did well,” Vinit said.

Bharara forced the forfeiture of 650 Fifth Avenue from entities that served as a front for the Iranian government.

Inset: Ali Hossein Khamenei, the supreme leader of Iran.

Court of public opinion Bharara, a dapper dresser with piercing eyes, is a skillful speaker, who often wins over crowds with his dry wit, self-deprecating humor and pop-culture references.

For example, last month at a New York Law School breakfast, he softened what could have been perceived as a finger-wagging speech on corruption with references to Ted Danson, Bruce Springsteen, “Happy Days” and the movie “Three Men and A Baby.”

Yet some of Bharara’s opponents criticize him for that type of public showmanship, saying he wages a battle for public opinion before ever setting foot in court.

“I had never encountered such an aggressive public relations campaign before and during trial,” one defense attorney, who lost to Bharara in court, told The Real Deal. “It was very effective and poisoned the public well.”

Meanwhile, last month, the New York Daily News cited a number of Albany lawmakers complaining that Bharara was grandstanding and unfairly tarring the entire institution with the same corruption brush.

But Bharara isn’t likely to hold back.

During his New York Law School speech he said that Albany is mired in “an overabundance of greed, cronyism and self-dealing” and deadpanned that some of the elected officials in the crowd had probably shown up seeking immunity.

Yet he left little doubt that he plans to clean it up.

“Whenever corruption is on the rise, that means democracy is on the decline,” he said.

“That means that law enforcement will use 74 April 2014 www.TheRealDeal.com

Left to right: U.S. Sen. Charles Schumer, one of Bharara’s big backers. Former Assembly Speaker Sheldon Silver, who was indicted last month. Developer Leonard Litwin, who has been widely identified as “Developer 1.”

Getting the ‘robber barons’ A native of India, Bharara was brought to the U.S. in 1970, when he was two, and settled in Eatontown, New Jersey.

His father, a pediatrician and the patriarch of a large family, opened a practice in nearby Asbury Park, a decision that turned his son into a rabid Bruce Springsteen fan. (The admiration is mutual. Springsteen once yelled: “This one is for Preet Bharara!” at a concert, then launched into a rendition of “Death to my Hometown,” which includes the line, “Send the robber barons straight to hell.”)

“We grew up very modestly,” Bharara’s younger brother Vinit told TRD during a phone interview. “It was a very normal childhood in suburban New Jersey.”

In elementary and middle school, Preet was a “classic geek,” with big glasses, braces,

“Respect, manners, civility, principles — that has always been his preach.”

The hard line worked.

Growing up, Preet Bharara’s heroes weren’t pro athletes; they were justice seekers like Bobby Kennedy.

“He loved the law from a very early time, and he loves being a prosecutor,” Vinit said.

“He has a very strong set of principles — and that’s kind of what a prosecutor does, right?

Brings people to account.”

Bharara’s dry, self-deprecating humor emerged in high school, where he was valedictorian.

He then went onto Harvard University and Columbia Law School before working in private practice for several years. In 2000, he took a job as an assistant U.S. attorney in the Southern District, first under Mary Jo

White and then under James Comey. His career path was set.

Lessons in scandals After his five-year stint as an assistant U.S. attorney, Bharara jumped over to the Senate Judiciary Committee, where he worked for Sen. Chuck Schumer.

Sources said he was quick to reach across the aisle. One senior aide who worked with Bharara on the committee said he was not a “dagger thrower.”

The colleague remembered Bharara not only as highly intelligent, but also as a charmer who “had a way of building relationships.”

The colleague recalled Bharara impersonating his preschool aged son pretend talking to Schumer on his toy phone. “It would bring the house down,” he said.

During his stint in D.C., Bharara was best known for his role in investigating a high-profile 2007 scandal in which the Justice Department (under President George W. Bush) was accused of firing a slew of U.S. attorneys for political purposes. The investigation culminated with the resignation of then-Attorney General Alberto Gonzales.

In the lead up to high-profile hearings, Bharara and other Judiciary Committee staffers spent hours interviewing witnesses.

Sources noted that the task was challenging because while the staffers were working for a Democratic committee, many of the witnesses were Republican appointees.

Bharara, the senior staffer recalled, was “very effective in that room.”

Bharara’s years in D.C., sources said, largely shape his view of elected leaders.

Daniel Richman, a Columbia University law professor and long-time Bharara friend, said it helped “form his views on the importance of independence” by U.S. attorneys.

“All U.S. attorney offices are places that ought to be removed from politics to the extent possible, and really ought to pursue cases wherever they go without worrying about fallout,” Richman said, recounting Bharara’s thinking.

At the very least, the scandals in Washington were good preparation for the battles Bharara waged after Obama appointed him U.S. attorney at the urging of Schumer.

Robert Raben — a former assistant attorney general and prominent Washington lobbyist — said working under Schumer also gave Bharara a sophisticated understanding of messaging and politics.

That understanding, Raben said, is more than a little helpful in Bharara’s current position.

As a prosecutor, Bharara is constrained in what he can publicly say. He did, for example, not comment for this story.

But like his predecessors, he’s become adept at maximizing the media impact of his criminal charges, Raben noted.

“To thread that needle requires a tremendous political acuity,” Raben said.

No political pressure Some say Bharara’s current investigation is likely to extend to other real estate players and politicians.

Continued on page 124

www.TheRealDeal.com March 2015 53

OFFICE LEASING

For the love of leasing CBRE and JLL are at the top of the food chain when it comes to filling office space

BY ADAM PINCUS BRE, the world’s largest commercial brokerage, leased up more office space, by far, than any other firm in Manhattan last year.

The firm unloaded about 14.5 million square feet for both landlords and tenants — or roughly a third of the 42 million square feet of new and renewal deals inked in Manhattan last year, according to a ranking

by The Real Deal.

Chicago-based JLL, which notched about 10.6 million feet, ranked second, followed

by Midtown-based Newmark Grubb Knight Frank, a division of the publicly traded BGC Partners, which racked up 10.4 million square feet.

The global brokerage Cushman & Wakefield took the No. 4 spot with 8.7 million feet, according to the ranking, which was compiled using industry databases, including the CoStar Group, and information from some of the firms, as well as other industry sources.

Savills Studley, which knocked out 4.7 million square feet, rounded out TRD’s top five.

C

Despite the fact that the Manhattan office leasing market has grown over the last year, with about 5 percent more space leased in 2014 than in 2013, most of the top leasing firms kept about the same basic market share as they had two years ago, the last time TRD ranked firms on the office-leasing front.

saw their square footage drop — Colliers by nearly 300,000 square feet and DTZ by more than 100,000.

No deal is too small To get to the top of the leasing food chain, there appears to be one cardinal rule:

The top-ranking companies all handled an array of transactions, from simple lease extensions that brokers could have executed in their sleep, to billion dollar deals that commanded an army of agents.

Still, two firms — CBRE and JLL — gained ground. JLL jumped two places in the ranking, increasing its leasing business by about 3.6 million square feet. CBRE, meanwhile, upped its total by about 1.3 million square feet. (While TRD was able to obtain the deals that made up all of the other firms tallies, it was not able to do so for JLL and CBRE.) On the flip side, Colliers International, No. 6 on the ranking, and DTZ, No. 7, both

Don’t reject any business, no matter how small the deal.

At least that was the motto that most firms, including CBRE and Cushman, took to the bank. Indeed, TRD’s analysis found that about 70 percent of Cushman’s 562 leases were less than 10,000 square feet — a ratio that was on par with most of the other firms on the list.

And the companies that made TRD’s cut all handled an array of transactions, from sim-

NYC’S TOP OFFICE LEASING FIRMS 14.5 MILLION* 10.6 MILLION 10.4 MILLION 8.7 MILLION 4.7 MILLION 2.8 MILLION 2.3 MILLION

*Total amount leased in square feet. Source note: Figures are from CoStar Group, individual firms and other industry sources for both landlord-side and tenant-side deals in Manhattan in 2014. TRD obtained full deal lists for all firms other than CBRE, JLL and Newmark Grubb Knight Frank. DTZ’s deals were largely done under the Cassidy Turley name prior to the firms merging.

Left to right: Studley’s Michael Colacino and Mitchell Steir; CBRE’s Lewis Miller represented Credit Suisse in a mega lease at 11 Madison Avenue; 280 Park Avenue, where Newmark Grubb Knight Frank repped hedge fund Taconic Capital Advisors.

74 April 2014 www.TheRealDeal.com

ple lease extensions that brokers likely could have executed in their sleep, to billion-dollar deals that commanded an army of agents.

While the small deals pay a lower fee and do not come with the same kind of sex appeal, they can be relatively lucrative on a per-square-foot basis.

That system of juggling both large and small deals runs counter to how things work in the investment sales world, where the biggest firms largely go after the big business.

When it comes to office leasing, the firms that dominate in the Manhattan market south of 59th Street broker an extremely wide range of deals.

For example, CBRE’s Lewis Miller, a former investment banker, represented Credit Suisse in its massive 1.1-millionsquare-foot renewal at 11 Madison Avenue in the Flatiron District. The landlords, the Sapir Organization and CIM Group, have not revealed how much they shelled out in commissions, but using standard commission rates (including discounts for big deals), CBRE could have pocketed more than $30 million for Miller’s work alone. Another group from CBRE, along with a NGKF team, represented the landlords.

That giant transaction was one of a slew of large deals last year. In fact, 2014 saw 58 leases of 100,000 square feet or more, compared with only 43 in 2013.

“The number of large leases that were signed [in 2014] was dramatically larger,” said Steven Durels, director of leasing for the city’s largest office landlord, SL Green Realty, during the firm’s fourth quarter earnings call.

Yet while there were more mega deals to get done, CBRE also took on tiny deals, representing Lloyd Goldman’s 362 Fifth Avenue, for instance, where fashion designer

By Chance inked a five-year, 1,141-squarefoot deal. If a typical commission scale was used, CBRE’s commission on that transaction may have been as low at $5,000, according to TRD’s calculations.

Dana Moskowitz, president of EVO Real Estate Group, which did not make TRD’s ranking, said “small space goes quickly and we have multiple bids.”

“What we have seen in the brokerage business this year is a lot of competition for quality spaces, especially 5,000 square feet and under,” said Moskowitz, whose firm joined the NAI Global network in November.

Macho broker The most obvious driver of Manhattan leasing activity in the last few years has been the growth of the so-called TAMI sector — technology, advertising, media and information — particularly in the hot Midtown South tech corridor.

Vornado Realty Trust’s CEO Steven Roth said last month that TAMI tenants made up nearly half of his firm’s leasing total, but a slightly smaller percent for Manhattan overall.

“TAMI tenants committed to more than 13.4 million square feet in 2014, close to 34 percent of total leasing activity,” Roth said on Continued on page 116

www.TheRealDeal.com March 2015 55

OFFICE LEASING

Manhattan’s mega leases The 10 most valuable office deals inked last year will generate nearly $8 billion for their lucky landlords

T

BY ADAM PINCUS he most valuable office lease inked in Manhattan last year will bring nearly $1.7 billion in cash to the owners of 11 Madison Avenue over 20 years.

The eye-popping 1.1 million-square-foot renewal by the global bank Credit Suisse starts at roughly $84 million a year for the building’s owners, the Sapir Organization and the CIM Group. The deal blows away all other Manhattan leases signed last year in both size and price.

This month, with help from the leasing data firm CompStak, The Real Deal looked at the most valuable Manhattan office leases signed in 2014. (CompStak determined the value by adding up all of the rent payments and then subtracting free rent and tenant improvement dollars paid by the landlord.)

The top 10 leases ranged in length from 15 to 33 years and from $449 million to $1.7 billion. They included seven new deals and three expansions or renewals. And they will rake in $7.6 billion for their building owners.

Meanwhile, four property owners — Sapir, Boston Properties, Vornado Realty Trust and Brookfield Property Partners — each laid claim to two deals.

The global law firm Kirkland & Ellis, which signed an $872 million expansion deal at Boston Properties’ 601 Lexington Avenue, had the second most valuable lease. In addition, Mount Sinai Health Systems’ 33-year “synthetic” lease at the Socony-Mobil Building at 150 East 42nd Street, clocked in at No. 3. The Mount Sinai deal — a complicated rearrangement in which Mt. Sinai purchased the condo units for 33 years, after which they will revert back to the previous owner — was valued at $860 million.

Rounding out the top five were renewals by two prominent law firms: White & Case’s $840 million deal at Rockefeller Group’s 1221 Sixth Avenue and Weil, Gotshal & Manges’ $671 million deal at Boston Properties’ famed General Motors Building.

Despite Weil, Gotshal’s pricey starting rent of about $110 per square foot, the white-shoe firm chose to stay put, a fact insiders attributed to the disruptive (and expensive) nature of moving.

All of these mega deals took place against the backdrop of a strong office leasing market that has gained serious steam in the last year. Overall Manhattan leasing activity jumped to 36.7 million square feet in 2014, from 33.9 million square feet the year before, while average office asking rents jumped to about $66.50 per foot, from about $60.50, data from the commercial firm Colliers International showed.

Brokers expect another strong year for property owners.

“I think 2015 will be a good year for landlords and a tough year for tenants in Manhattan,” said Michael Cohen, president of the tri-state region of Colliers.

But beyond 2015, he predicted some market changes when it comes to chasing down value in the leasing market.

“The seeds of the next cycle are being sown as we see these migrations out of Midtown to the newly anointed more desirable areas — the West Side, Hudson Yards, [Brookfield’s] Manhattan West.

The Midtown core will be the value play.”

In addition to generating big money for the building owners, these mega leases also mean multi-million-dollar commissions for the brokers and their firms.

Although big leases often come with sharply discounted cuts for brokers, all of these deals likely came with minimum commissions of $5 million for the tenant-rep firms and $2.5 million minimums for the landlord’s broker. And many of the deals likely had commissions way more than that.

CBRE took the lion’s share of the business, representing tenants on four deals and landlords on another four. Cushman & Wakefield, which had four deals in total, was right behind that. Both firms declined to comment.

While the city’s biggest offices leases have more upside than downside, they do have some baked-in risk — for both landlords and tenants. That’s because they lock both sides into a rent rate for years.

Dennis Sughrue, a real estate attorney and partner at the law firm Pryor Cashman, said a

The Sapir Organization, Boston Properties, Vornado Realty Trust and Brookfield Property Partners each laid claim to two of the top 10 deals.

Continued on page 118

Manhattan’s 10 most valuable office leases RANK

ADDRESS

LANDLORD

TENANT

SIZE (SQ. FT.)

STARTING RENT

LEASE TERM

TRANSACTION TYPE

VALUE

1

11 Madison Ave.

Sapir Organization, CIM Group

Credit Suisse

1.1 million

$70s

20 years

Renewal

$1.7 billion

2

601 Lexington Ave.

Boston Properties

Kirkland & Ellis

403,000

High $90s

20 years

Renewal

$872 million

3

150 East 42nd St. (Socony-Mobil Building)

Hiro Real Estate

Mount Sinai Health System*

448,819

High $40s

33 years

New

$860 million

4

1221 Sixth Ave.

Rockefeller Group

White & Case

440,218

High $80s

21 years

New

$840 million

5

767 Fifth Ave. (GM Building)

Boston Properties

Weil, Gotshal & Manges

390,000

Mid $110s

15 years

Renewal/ Expansion

$671 million

6

1290 Sixth Ave.

Vornado Realty Trust

Neuberger Berman

354,891

High $70s

22 years

New

$610 million

7

11 Madison Ave.

Sony

547,996

Mid $70s

16 years

New

$599 million

8

7 West 34th St.

Amazon

456,000

$62.80

17 years

New

$540 million

9

225 Liberty St.

Time

669,832

Low $50s

18 years

New

$506 million

398,712

High $50s

18 years

New

$449 million

10

Sapir Organization, CIM Group Vornado Realty Trust Brookfield Property Partners

225 Liberty St &

Brookfield Property

Hudson's Bay

250 Vesey St.

Partners

Company

Source: Data is from CompStak and from some landlords for 2014 deals. The Mount Sinai deal was designed as a “synthetic lease” for tax purposes and involved elements of both a lease and sale.

56 March 2015 www.TheRealDeal.com

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Behind the battles at Sitt Asset A look at the buildings at the center of NYC real estate’s latest family feud

BY KYNA DOLES AND CLAIRE MOSES t its peak in 2012, Sitt Asset Management, the family firm led by brothers Ralph, Eddie, Jack and David Sitt, made Manhattan’s third most profitable building sale of the year and nabbed marquee tenants for its flagship property at 2 Herald Square.

But behind closed doors, the brothers were embroiled in bitter disputes over who was calling the shots of when to buy and sell, and whose hands the firm’s funds were passing through.

By November 2014, Jack Sitt, a former principal, had sued the company and his brother Ralph, claiming that he was deprived of millions of dollars in distributions and commission. Jack still owns a fifth of the company. Marilyn Sitt, the family’s matriarch, and brothers Ralph, Eddie and David own the remaining 80 percent. Ralph filed a counterclaim against Jack’s suit in late January.

Last month, Eddie Sitt — after being tipped off by his brother Jack to take a peek into the company’s records, according to court documents — filed suit against Sitt Asset, Sitt Leasing, and Ralph and David, also claiming he lost out on money that the two took from the company’s leasing division.

Adam Leitman Bailey, a real estate attorney who represented Ralph and Sitt Asset in the November suit, declined to comment for this article. Stephen Meister, who is listed as Ralph’s defense lawyer on his counterclaim, did not respond to requests for comment.

The real estate industry is no stranger to family feuds. At the Feil Organization, a dispute pitted Jeffrey Feil against his three sisters who accused him of buying them out of the company at a discounted rate. Brothers Henry, Thomas and Frederick Elghanayan split their firm Rockrose Development in 2009, creating two separate companies to try to divvy up the assets in order to head off a potential fight among their children.

Sitt Asset Management currently owns 11 Manhattan properties, including six Soho retail locations. The Real Deal took a look at some of the most prominent properties in the Sitt lawsuits and what the brothers are saying about them.

A

414 West 14th Street Sitt Asset sold this 56,000-square-foot office and retail building for $94 million to Ponte Gadea Group in December 2013.

The sale may have netted Sitt Asset and its partner the Carlyle Group $24 million, but Eddie and Jack questioned the need for selling and why Ralph cashed out on it first.

Eddie claimed that Ralph secretly sold his interest in the property in 2009, netting 58 March 2015 www.TheRealDeal.com

him a big profit. When Carlyle, which had taken full control of the building, and Sitt Asset Management sold the property in 2013, Ralph didn’t notify his brothers about his prior actions and his $400,000 windfall, Eddie claimed in court documents.

Jack, in his own lawsuit, also claimed that Ralph sold the family’s shares in the property without notifying any of the other

money he withdrew, unbeknownst to his brothers, from the family’s bank account.

Ralph bought the building for $11 million in 2012, city records show.

Jack further claimed that Ralph not only withdrew the funds surreptitiously, but that he went on to buy seven more Manhattan properties with his ill-gotten $4 million profit.

414 West 14th Street

the founders of Duane Reade. According to court papers, Sitt Leasing, the division of the company that manages the leasing for the building’s tenants, earned a $4.9 million sales fee on that transaction that, according to Jack’s suit, made it directly into Ralph’s pockets.

Jack accused Ralph of taking the entire $4.9 million, rather than giving the brothers the $1 million they were each entitled.

In his counterclaim, Ralph said that Jack borrowed $2.4 million from their parents, Barry and Marilyn. Ralph said that Jack didn’t pay their parents back, but instead paid the monthly interest on the loan for six months, after which he said he couldn’t afford it anymore. When the company sold 1370 Broadway, Jack agreed to relinquish his proceeds to his parents to reduce his outstanding debt.

2 Herald Square In 2007, Sitt Asset bought the building — where H&M will soon vacate more than 60,000 square feet soon — for $500 million. One of the brothers claimed the other may be responsible for driving out tenants.

Eddie claimed that Ralph and David denied him the chance to refinance the building at a “historically low rate,” according to court documents. He also claimed Ralph didn’t make any efforts to renew leases for the property’s anchor tenants. Jack even claimed that Ralph took out a $30 million loan from the Paramount Group for the property, without informing him or any of the other members of Sitt Asset.

34 Gansevoort Street

Jack Sitt (inset left) and his brother Eddie (inset right) have filed suits against their family firm over dealings involving several buildings, including 414 West 14th Street, top, 2 Herald Square, left, and 450 Broadway.

family members at the company. Jack further claimed that he never received his share of the profit on this sale.

Ralph countered that Jack “mismanaged” the property, which delayed a planned renovation of the building. Instead, Ralph said, Sitt Asset and the Carlyle Group had to put up capital. Because the Sitts didn’t put up their share of the money, the Carlyle Group took full control of the property and as a result, Sitt Asset lost the right to oppose a sale of the property, Ralph said in court documents.

450 Broadway Eddie claimed that 450 Broadway is one of the properties that Ralph bought with

Ralph countered that he never secretly took out money from the company’s account to buy the property. Instead, he said that together with brothers David and Eddie, he took out a total of $900,000 to pay off a loan on another property, in which Jack didn’t invest capital. Ralph also claimed that the money was returned in full and that he wasn’t the only family member who owned the seven Manhattan properties.

1370 Broadway Sitt Asset sold the building to Normandy Real Estate in 2012 for $125 million, on behalf of the firm, and Carlton Associates, the investment arm of the Cohen family,

Sitt Asset purchased this five-story retail building in November 2007 for $9.9 million. Disputes arose after the property was refinanced and payouts weren’t given to all the investors.

Jack, in his lawsuit, claimed that Ralph refinanced this property, walked away with $1.7 million in proceeds from the loan, and never told his brothers about this.

Eddie didn’t mention this property in his lawsuit against the company.

Ralph claimed that this property fell into distress in 2009, because the family owed a nearly $10 million loan on the building to Wells Fargo. Ralph claimed that he lowered the company’s debt to the bank down to $4.75 million. While the other family members signed the papers for the new loan, Jack refused to sign the papers. This would have jeopardized the family, Ralph said. As a result, Ralph signed the documents for the new loan together with Eddie, David and Marilyn.

They refinanced the building again in 2013, after which the investors received a $1.3 million payout. TRD www.TheRealDeal.com March 2010

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Study finds doubling of Brooklyn retail corridors in the past two years Population growth, high office demand pushing borough’s retail activity to new heights

BY RICH BOCKMANN AND KERRY BARGER ith more than 19,000 new residential unit permits filed last year and an office vacancy rate of 4.2 percent — the lowest in the nation — Brooklyn added 27 new retail corridors last year for a total of 121, nearly double the number from two years ago, according to commercial brokerage CPEX’s annual retail report.

The firm based its measurements on the growth in the number of retail

W

Salmar Properties’ Liberty View Industrial Plaza, where Bed Bath & Beyond signed the borough’s largest retail lease in 2014 at approximately 120,000 square feet. In addition, Jamestown Properties’ 16-building, six-million square foot Industry City is transforming the once industrial section along the waterfront into an office and manufacturing destination.

And as residential demand has surged in Bed-Stuy, 33 new retail locations opened in the neighborhood last year, 28 of which were

Park Slope’s Fifth Avenue has become a “Restaurant Row” in its own right. Grand Central Oyster Bar, offshoot of the iconic seafood eatery, opened there last year, along with Two Boots pizza. Other popular dining and drinking destinations include al di la Trattoria, Calexico, Blue Ribbon Brooklyn, Naturo Ramen and the punny Pork Slope.

outlets and the appreciation of rental prices for those locations.

An influx of new residents to BedfordStuyvesant and the changing office landscape in Sunset Park created new retail landscapes in those Brooklyn neighborhoods last year, the report found.

“The growth of retail corridors in Brooklyn over the past two years has been

restaurants, cafes or bars.

In addition, six new retail stretches were created from the division of existing corridors.

The borough’s priciest strip continues to be Downtown’s Fulton Street Mall, where rents exceed $250 per square foot.

Williamsburg’s Bedford Avenue ranks second with rents ranging from $200 to

As Bedford Avenue in Williamsburg has become arguably one of the strongest retail corridors in Brooklyn, retailers like Whole Foods are being drawn to the surrounding side streets just to be in proximity.

huge, fueled by a number of non-retail drivers, such as an increase in residential development and an exceptionally low office vacancy rate,” said Ryan Condren, managing director of CPEX’s retail team.

“As more retailers flock to the borough, we are not only seeing an increase in the total number of retail corridors, but also a significant jump in price as well, with two corridors at over two hundred dollars per square foot for the first time ever.”

In Sunset Park, CPEX represented 60 March 2015 www.TheRealDeal.com

$250 per square foot. The influx of retailers like Whole Foods, Blue Bottle and Steven Alan Home has poised the nearby North 4th Street to experience marked growth in the near future, CPEX said. North 4th Street is one of eight retail corridors where rents range from $100 to $149 per square foot.

“This is the prime example of a side street that not so long ago had zero retail traction,” the report stated, “but is now incredibly one of the more expensive blocks in the borough.” TRD www.TheRealDeal.com March 2010

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All information is from sources deemed reliable but is subject to errors, omissions, changes in price, prior sale or withdrawal without notice. All rights to content, photographs and graphics reserved to Broker. Equal Housing Opportunity Broker.

We Are Pleased To Welcome

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Christopher J. Infante Licensed Associate Real Estate Broker 445 Park Avenue, New York, NY 10022 cinfante@bhsusa.com t: 212-906-9299

All information is from sources deemed reliable but is subject to errors, omissions, changes in price, prior sale or withdrawal without notice. All rights to content, photographs and graphics reserved to Broker. Equal Housing Opportunity Broker.

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The Garment District goes in for

‘alterations’

Neighborhood players await rezoning, even as some worry about the impact changes will have on the area’s manufacturing roots Green and Crystal Green, have risen in the Garment District and they are all on the western edge of the neighborhood, which was partially included in the sweeping 2005 rezoning of the abutting Hudson Yards area.

That rezoning allowed buildings smaller than 70,000 square feet to be converted to residential or hotel use, and also allowed for teardowns.

Tapping tech

In the 1950s, the fashion industry represented 13.5 percent of the city’s employment, but that figure has dropped to less than 1 percent today.

BY JANNA HERRON n alteration that has nothing to do with hemlines could bring another wave of changes to Manhattan’s Garment District.

While the area has seen an influx of hotels in the last decade, the city is now considering zoning changes that would remove restrictions on landlords, so they can rent their buildings entirely to office tenants.

Potential tailoring to the Garment District’s current zoning, which the Department of City Planning is reviewing, would undoubtedly accelerate an about-face that’s already underway.

Steven Kaufmann, president of the Kaufman Organization, which owns several office properties in the Garment District, said a rezoning would “increase property values and tax revenues for the city.”

Some argue that the city should get rid of a 1987 regulation that requires a large portion of the space in the area to be set aside for manufacturing use. But a more moderate plan is also being pushed to preserve some of the manufacturing in certain areas, while expanding the types of allowable commercial uses in others.

Opening the floodgates for residential development, however, is not likely to be on the table, said Ira Fishman, CEO of EVO Real Estate Group and a board member of the Garment District Alliance, a nonprofit funded by the area’s property and business owners .

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70 March 2015 www.TheRealDeal.com

“Over the last five to 10 years, city officials have said in meetings with The Garment District Alliance that they don’t want residential in that area. They want to keep it strictly a commercial area, because it’s in the heart of Midtown,” said Fishman. “They gave us residential zoning between Eighth and Ninth avenues, but Fifth Avenue to Seventh Avenue should be commercial.”

Still, looser commercial zoning requirements would drive up office rents, which have at least doubled in the last 15 years, as well as help improve the retail in the area, said Jeff Nissani, associate broker at Marcus & Millichap. (The latest retailer to announce plans to join the fray is the ever-popular Shake Shack, which is scheduled to open in the fall at 1333 Broadway.)

But while a rezoning would be a boon to landlords and investors, sources say it could deliver the final blow to the industry that gave the neighborhood its name.

“We will lose experienced manufacturers and it will jeopardize the present trend of the fashion industry coming back to the U.S.,” said Samanta Cortes, one of the cofounders of Save the Garment Center, which was formed in 2007 to advocate for preserving the district’s manufacturing status. “It’s not that U.S. manufacturing solely depends on the New York City Garment Center, but the initial prototypes and high-end manufacturing is based in New York, and it’s considered the backbone of the industry.”

A partial transformation In the last decade, the area, which runs from Fifth to Ninth avenues and from 34th to 42nd streets, has seen 30 new hotels, and there are 10 more in the immediate pipeline. Those hotels, which include trendy hotspots like Refinery and the Strand, have played a big role in turning the area into a hip destination, particularly for tourists.

“It’s a 24/7 neighborhood with a multitude of businesses, tremendous retail and phenomenal hotels and restaurants,” said the CEO of the Handler Real Estate Organization, Scott Galin, who has had a 30-year presence in the neighborhood. “There was a time not that long ago when it was strictly a business district, which would be dead at the end of the workday.”

Stephen Goglia, CEO of the David Burke Group, which in May opened the restaurant Fabrick in the Archer Hotel at 45 West 38th Street, echoed that point.

“Hotels bring people back into a neighborhood. For breakfast, we have hotel guests and people meeting for business,” he said, noting the eatery’s name was meant to pay homage to the district’s history. “We see people working in the community come in for lunch and on weekends.”

In addition to the celebrity-chef cache at Fabrick, many of the new hotels in the area include rooftop bars and lounges that have helped change the neighborhood’s image.

But only 12 new residential buildings, including Glenwood’s luxury rentals Emerald

In addition to the hotel development, the Garment District is attracting so-called “TAMI” businesses — those in technology, advertising, media and information — because of its relatively affordable rents and large stock of Class B and C office buildings.

“When Flatiron and Chelsea became too expensive, you saw a push northward into the Garment District from creative tenants,” said Marcus & Millichap’s Nissani.

Asking rents in the area just south of Times Square, the hub of the remaining garment industry, — were $51.74 per square foot in 2014’s fourth quarter, according to the commercial firm Newmark Grubb Knight Frank. That was the lowest in Midtown and Midtown South.

By comparison, rents average close to $58 per square foot in Chelsea and $62 in Flatiron.

And some have locked in leases at even lower rates.

The search engine firm Elite SEM signed a seven-year, 7,160-square-foot lease last year at 142 West 36th Street, where the database CoStar Group shows that the asking rent on the deal was $44.50 per square foot.

That’s the same building that commercial real estate tech company View the Space moved into earlier last year. And, in the biggest coup, Amazon signed a 17-year lease in November for 470,000 square feet at 7 West 34th Street, on the southeastern border of the neighborhood, where rents start at $62.80 per square foot, Vornado Realty Trust said in public filings earlier this year.

“You have close proximity to Penn Station, Grand Central Station and Port Authority,” said Handler’s Galin. “So, relocating your business here means you can have employees located in Westchester, Long Island, or New Jersey. That’s a giant selling point.”

Rationalizing the rezoning Property owners are anxiously awaiting a move from the chairman of the City Planning Commission, Carl Weisbrod, who late last year reportedly told neighborhood stakeholders that he would address the rezoning “in the first quarter of 2015.”

Kaufmann told TRD his firm considered selling 132 West 36th Street, an office building, last year, but despite strong interest decided to hold off because values were going Continued on page 120

www.TheRealDeal.com January 2014 35

Robert Reffkin, the co-founder and CEO of Compass.

DAY IN THE LIFE OF:

Robert Reffkin

The Compass CEO on playtime with his daughter, his espresso habit and Thursday night karaoke

R

obert Reffkin is the co-founder and CEO of Compass (which until last month was known as Urban Compass). The start-up brokerage — which Reffkin runs with partners Ori Allon and Ugo Di Giralmo — has raised more than $70 million since launching in May 2013. The technologyfocused firm has shocked the industry by luring top Manhattan agents such as longtime Douglas Elliman-star Leonard Steinberg. The 35-year-old Reffkin has been written up in Fortune for his all-star resume, which includes graduating from Columbia University in two years, serving as a White House fellow, and doing stints at the mega-consulting firm McKinsey & Co. and Goldman Sachs. He’s also a marathoner to boot. Reffkin spends most of his time at the office (from roughly 8:30 a.m. to 11 p.m. during the week and between noon and 4:30 p.m. on weekends). He lives with his wife and daughter in the West Village and can often be found brunching with them at Bubby’s in the Meatpacking District or playing in the park on Saturdays or Sundays.

6:00 a.m. I wake up and the first thing I do is respond to emails that have come in overnight. After that I work out. I like running along the water from West 12th Street to the South Street Seaport and back.

7:00 a.m. I play with my 19-month-old daughter, Raia. Her name means “friend” in Hebrew. Playtime involves reading a book — “Huggy Kissy” is a favorite — or playing music. I play the guitar and sometimes she will play on an electronic drum set she has.

8:30 a.m. I leave my place in the West Village and get on a Citi Bike to go to work at 72 March 2015 www.TheRealDeal.com

my office at 90 Fifth Avenue. Before I head into the office I stop at Liquiteria on the block and grab a coffee and cacao smoothie.

The drink has coffee, banana, coconut and almond milk. It’s my liquid breakfast.

espressos a day. This is on top of the coffeeflavored smoothie, which I consider health food. I like making my own espressos on an espresso machine we have in our office.

9:00 a.m. On Thursdays, we have the Compass running club, when we meet with a group of Compass employees and agents at the track at FDR and Sixth Street with a trainer. I pay for it personally. I think it’s important for the people in the company to be in great shape.

Breakfast is a shake from Liquiteria.

6:00 p.m. I make sure I talk to my mother every day. It’s very important to me. She lives here in New York, on the Upper West Side. My mother has been a real estate agent for about 16 years. She currently works at Charles Rutenberg. We see each other once or twice a week.

10:00 a.m.

At work, I spend about a third of my day interviewing new people.

The decision to hire someone has to be unanimous. If one person doesn’t think it’s a good fit, we don’t hire them.

11:00 a.m. I meet with different teams around the office. I don’t have a desk and I rarely use a computer. I think everything is easier with your phone. I talk to as many different teams as possible to discuss what they’re working on and try to help think of a strategy with them.

Compass buys its staff lunch every day. It’s usually healthy, but pizza and BBQ can also be on the menu.

Reffkin lights Shabbat candles every Friday evening before hosting dinner for colleagues.

2:00 p.m. I meet with Ori, my co-founder, who has taken the lead as our fundraiser.

Goldman Sachs, Founders Fund and some real estate developers are among our investors.

3:00 p.m. I usually have at least three

8:00 p.m. On Fridays, my wife and I host people from work for Shabbat dinner at my apartment. Before the guests come, I light the candles and say the prayers with my wife, daughter, mother and mother-in-law.

12:00 p.m.

We provide lunch for our employees every day. It’s incredibly important to create a space where people talk to each other. Usually it will be something healthy. About one day a week, we’ll have something that’s a little bad for you, like BBQ or pizza.

5:00 p.m. Every other Thursday, the company gets together for a happy hour after work. Usually the team will spend about two hours in the office, having drinks before we head out to an activity such as karaoke or bowling. Last night, I left karaoke about midnight.

“Huggy Kissy” is one of his daughter’s favorite books.

9:00 p.m. After our Shabbat dinner we play a game called ‘Press,’ where you get three minutes to ask another person anything you’d like, as if you were a reporter.

11 p.m. On weekdays, I leave the office.

When I get home, I kiss my wife, who is already asleep, on the cheek and say ‘I love you.’

1:00 a.m. Before going to bed for a roughly five-hour night of sleep, I make sure all unanswered emails are addressed. I feel like it’s my responsibility to respond to every email, every night, before I go to sleep.

By Claire Moses

PHOTOGRAPH OF ROBERT REFFKIN FOR THE REAL DEAL BY MICHAEL TOOLAN

When it comes to foreign buyers, attorneys ask ‘who is to judge?’

Real estate lawyers react to questions about transparency

BY TESS HOFMANN ore than half of Manhattan luxury apartment purchases were made through shell companies last year — a statistic that received much attention last month amid new reports focusing on how these corporate veils are sometimes used to move ill-gotten gains.

The fact that LLCs are often used to optimize tax efficiency on investment properties and avoid unnecessary liability is well known to many in the industry. Some real estate attorneys who have represented foreign buyers in the purchase of Manhattan real estate think that the connection drawn between shell corporations, foreign buyers and criminal activity is unfair.

“I have many clients, not necessarily foreign, who decide to purchase in an LLC,” said Meg Goble of Rheem, Bell & Mermelstein.

“I don’t think the [reports] are giving the full picture of what’s out there.”

The New York Times’ five-part investigation into clandestine foreign buyers at the Time Warner Center, which ran last month, concluded with a story

M

about a Russian deputy finance minister who bought a $37.5 million condo at the Related Companies’ building through a shell company.

Foreign scapegoats?

Missing from the Times’ series, which stated that at least 16 foreign buyers of Time Warner Center luxury condominiums have been

be diamonds. The tangible asset system doesn’t require disclosures of names.”

Ed Mermelstein, a Rheem, Bell & Mermelstein founding partner who works extensively with Eastern European buyers, said that “the bent on the story, which tries to indicate that foreigners are trying to siphon funds into the United States and [suggests] possible illegalities associated

There is a misconception that foreign funds should be viewed with heightened suspicion, and that if a foreign buyer chooses to purchase under an LLC, that suspicion should be even greater. the subject of government inquiries, is the potential for abuse by its American residents, Goble said. “How many of them have been audited on their federal income tax?”

The issue of moving funds anonymously is not unique to real estate, said Jay Neveloff, an attorney at Kramer Levin Naftalis & Frankel. “There isn’t an asset class anywhere in the United States where you couldn’t maintain anonymity,” he said. “It could be art, it could be an office building. It could

with these moneys coming into the U.S. is, to a large extent, ridiculous.”

Vetting process There is a misconception, attorneys said, that foreign funds should be viewed with heightened suspicion, and that if a foreign buyer chooses to purchase under an LLC, that suspicion should be greater still.

Goble said that from her standpoint, the vetting process for foreign buyers and

American buyers does not differ much. In each case, she makes every effort to meet the client in person. “I’m not separating things into foreign buyer and U.S. buyer,” she said.

“You’re basically doing the same thing with every transaction. You want to know that the person is who they say they are.”

All the attorneys interviewed by The Real Deal said that they, at least ostensibly, always know the identities of their clients.

Know your client Attorneys see banks as having the last word on whether the funds involved in a transaction are legitimate, because of their greater access to financial records. One source recalled an instance in which a Ukrainian buyer of a condo at Extell Development’s One57 lost a multimillion-dollar deposit after his bank account was frozen due to European sanctions on a close relative.

But while attorneys and banks can be held liable for assisting a criminal in the transfer of funds, building sponsors typically aren’t, Goble said, and added that criminal background checks are not always a part of condo and co-op board review processes.

When building sponsors and condo boards complete financial reviews, they are more interested in whether specific bank deposits signify borrowed money, than whether they signify criminally tainted funds.

“There’s only so much [building sponsors] are entitled to know,” Neveloff said. TRD

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www.TheRealDeal.com March 2012 00

NEIGHBORHOOD DIVE

BUSHWICK’S BUZZ

Behind the transformation of the once-gritty Brooklyn nabe

T

BY KERRY MURTHA he name Bushwick still conjures visions of burning buildings, poverty and drugs for New Yorkers of a certain age. But to the young-and-tattooed set, the streets of the Northeast Brooklyn neighborhood mean new luxury apartments, art galleries, trendy bars and all things hipster. Where crime rates have plummeted — there were nine murders in NYPD’s 83rd Precinct last year, down

TOP DEVELOPMENTS Bushwick now hosts at least eight condo buildings, some already open and others on the way. The newest development, at 330 Bleecker Street, consists of eight twobedroom condos featuring handmade oak kitchen cabinets and engineered bamboo flooring. Prices start at around $725,000 and cap at $950,000. Douglas Elliman is handling sales.

330 Bleecker Street

from 77 in 1990 — development is on the rise. Between 2011 and 2013, the number and price of development sites sold in Bushwick more than doubled, according to research compiled

by Ariel Property Advisors. Development sites are fetching an average of $100 per buildable square foot these days, up from $35 in 2011. A host of new luxury rentals and condos are in the works as artists, twenty-somethings and young professionals flock to the lower rents, proximity to the L train and emerging

13 Melrose

room and roof deck. One bedrooms start at $2,200 per month and two bedrooms run from $2,700 to $3,200 monthly.

Leasing is being handled by aptsandlofts. com. The property is also currently up for sale, with an asking price of $81.5 million.

95 Evergreen

Colony 1209

Developer Boaz Gilad launched 13 Melrose, one of the first boutique condominiums in the neighborhood, in August. It features eight units — seven one bedroom condos with home offices and one duplex apartment —five of which sold in the first week.

Prices range from $389,000 to $733,000.

Marketing is by aptsandlofts.com.

Colony 1209, a new 127-unit luxury rental building on Dekalb Avenue, boasts a list of amenities more typically found in Manhattan and Williamsburg: a 24hour doorman, screening room, billiard

Local Lore

Retail Scene

In 1907, a new coalfired oven was added to the original foundation of 254 Irving Avenue. Soon, the building was providing fresh bread daily to the neighborhood’s Italian immigrants. Over 100 years later, Charlie Verde discovered the long-forgotten treasure behind a crumbling plaster wall in the building’s basement and Verde’s Coal Oven Pizzeria was born, one of a handful of pizzerias in the city, including Patsy’s, Lombardi’s and Grimaldi’s, permitted to use coal-fired ovens.

Retail rents have more than doubled in the last six to nine months, from around $15 to $40. The largest retail development is at 82 Bogart Street. The North Development Corp. acquired the 160,000-square-foot property in August for $12 million. The developer plans to convert the building, which takes up a city block, into a sprawling nightlife, retail and artist gallery. Early mentions include the Guitar Center and Urban Outfitters.

Most Expensive Recent Sales:

290 Harman Street, 4,280-square-foot, 12-unit, three-story residential building, sold for $600,000

Watch For

294 Harman Street,

The Read Property Group is planning a 10-building development at 123 Melrose, the 6.4-acre former Rheingold Brewery, with 977 rental units, 30percent of which will be affordable. The former St. Mark’s Evangelical Lutheran Church at 626 Bushwick Avenue is poised to become 99 rental apartments under the lead of Cayuga Capital. The church’s steeple will house a triplex.

Top floor units will have terraces and 20 percent of the units will be affordable.

4,275-square-foot, 12-unit, three-story residential building, sold for $600,000

76 March 2015 www.TheRealDeal.com

nightlife. The stark contrast with Bushwick’s past was captured in a 2014 book by Meryl Meisler. “A Tale of Two Cities: Disco Era Bushwick” juxtaposes the neighorhood’s rubble with images from the city’s flamboyant dance halls of the period.

After a recent return to Bushwick, the author said what struck her most was the newfound pride in the neighborhood. “You see people wearing clothing that says ‘Bushwick’ on it,” she said. “Years ago, they would be ashamed to say it.”

351 Linden Street, 7,000-square-foot, 16-unit, four-story residential building, sold for $250,000

Least Expensive Recent Sales

140 Weirfield Street, two-unit residential building, sold for $200,000

1297 Bushwick Avenue, three-unit residential building, sold for $200,000

86 Cooper Avenue, two-unit residential building, sold for $215,000

Two years ago, the site at 51 Troutman Street was an empty lot. Today, it houses a fourstory building with eight rental units. Rents start at $2,076 per month for a 526-squarefoot one bedroom and go up to $3,323 for a three-bedroom duplex. Leasing is being handled by Modern Spaces.

A Commercial Broker’s Take “We are seeing a unique set of retailers looking to lease ‘event’ space for venues like music, theater and even ping pong,” said David Shorenstein of Silvershore Properties, which owns seven retail developments in Bushwick.

A Residential Broker’s Take “Bushwick is locked and loaded as a gentrifying rental market, and investors are pouring into the multifamily re-sale market,” said Doug Perlson, CEO of RealDirect. “But as quick returns are harder to come by, we’ll be seeing more enduser purchases and less flippers over the next year.”

The former Schlitz Brewery at 95 Evergreen Street, recently purchased by Hornig Capital Partners, Savanna and Chelsea Village Associates for $33.7 million, will soon be converted into office and retail space. The seller was represented by Berko & Associates. The new owners of the five-story, 165,000-square-foot building plan to invest $20 million in the building’s makeover, and will keep the large floor plates, 30-foot ceilings and oversized windows with views of Manhattan. Cushman & Wakefield is marketing the property.

Price Trends

$2,087

Average monthly rental price for a onebedroom, up 20 percent from a year ago.

Studios average $1,800, one bedrooms, $2,087, two bedrooms, $2,173.

45%

Jump in median home sales price in the past year, to $494,750.

$1.06 million

The most recent average listing price for a multi-family home, up 5% since January.

19%

Gap between median sales price in Bushwick and overall Brooklyn.

$497

Average price per square foot for a home, 18% lower than the average for Brooklyn.

1095 Bushwick Avenue

Demographic changes from 2000 to 2010: Population: 314,405, down 2.1% from 2010, up 10% from 2000 Median Household Income: $33,162, down 2% from 2010, up 48% from 2000 White Collar: 69.6% Blue Collar: 30.4%

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Real estate pros share picks for books about urban planning, leadership and New York history Where do you look for insight and inspiration?

To find out, The Real Deal asks those in the industry what they’re reading.

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Brad Siderow

Scott Walsh

Founder and CEO of Siderow Residential Group What are you reading right now or what did you finish most recently?

“How To Run A Country: An Ancient Guide for Modern Leaders”

by Marcus Tullius Cicero

Vice president of Commercial and Residential Development, Forest City Ratner Companies What are you reading right now or what did you finish most recently?

I’m always reading more than one book at a time.

Right now, the five books on my nightstand are “Building Seagram” by Phyllis Lambert; “The Culture Map” by Erin Meyer; “Paradise Planned” by Robert Stern, David Fishman & Jacob Tilove; “Greek Revival America” by John Hall et al, and “The Bucolic Plague” by Josh Kilmer Purcell.

What spurred you to read this book?

I have always had a fascination with Ancient Rome and its leaders.

Has anything stuck with you? Would you recommend it to others?

Yes, that the world’s superpower of 2,000 years ago dealt with the same issues that the U.S. deals with today in many areas like immigration, military, war, money and power. Yes, I would recommend it.

What spurred you to read these books?

As an architect by training, I have a deep interest in building and planning.

I’m most enjoying “Building Seagram,” a fascinating personal history on the building, a modern icon in New York.

Roy Kim Having traveled and studied development Head of New Development, Compass all over the world, I’m refreshing my What are you reading right now or what knowledge as well as creating a new list did you finish most recently? of places to visit by reading “Paradise I love books that are set in New York: Planned.” On the business side, I’m reading “The Culture Map,” which deals “Rules of Civility,” with successfully navigating cultural

by Amor Towles; “Another Country,” difference in the workplace.

The last two books are connected to

by James Baldwin; “Here is New York,” my personal life. During my college years in Ithaca, I grew to love the Greek Revival

by E.B. White. farm houses that dot the Finger Lakes landscape. This year, my partner and I searched many towns and villages to find What spurred you to read these books?

Living in New York is like living in a bunch a wonderful well-preserved house. This journey has led us to Schoharie County, of different worlds at once, but I really on the west side of the Hudson. “The appreciate getting insights into what the Bucolic Plague” resonates with the desires city was like in previous eras. driving this search, and takes place in Has anything stuck with you? Would you Schoharie County, a hidden gem in our great state. recommend them to others?

Each book has an equally vivid description Has anything stuck with you? Would you of the city. In “The Rules of Civility,” recommend them to others? there is a scene set on the ground floor of The architectural books reinforce permaa diner, looking at Trinity Church. I can nence in building, and [those] projects almost picture it nestled in the building south of the church, beside the old-school represent powerful moments and great minds in their time. I would recommend men’s shoe store that is there now. In them all, and as I’m curating the library at “Another Country,” you can almost hear our New York by Gehry tower at 8 Spruce the footsteps of the main character as he Street, I’ve added most to our designmarches up Times Square, and feel the focused collection. TRD grittiness of the city back then. www.TheRealDeal.com March 2010

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he realty division of the global investment banking giant Lazard Frères & Company announced it would develop a 1 million-square-foot office complex in the former American Chicle gum factory and a neighboring building in Long Island City, 33 years ago this month.

The bankers believed the firm could convert the former manufacturing space at 3020 and 30-30 Thomson Avenue into a $100 million office complex. At the time, the country was recovering from a recession and rents in Midtown were peaking at about $40 per square foot. Lazard figured they could charge about $20 per foot, and because of its high-load floors, it would be well-suited for “data processing,” and other A rendering of Lazard’s International Design Center. back office uses.

But the redevelopment project was troubled from the start. The next year, Lazard switched gears and decided to convert the buildings to a design district, dubbed the “International Design Center,” to host showrooms for manufacturers who were marketing their products to interior designers and decorators and were priced out of Manhattan. The $150 million center opened in 1985, but within a few years, the project failed.

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1958: CITY HALTS “OVER THE COUNTER” PROPERTY SALES

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ew York City stopped selling real estate through an opaque process that drew few buyers, 57 years ago this month, shifting instead to offering everything through fully advertised auctions.

James Felt, the chairman of City Planning who took the helm of the city’s scandal-plagued Bureau of Real Estate, made the announcement that the sales had ended.

The change occurred weeks after the city’s Investigation Commissioner said he was looking into the real estate unit’s practices, which another city agency later called “slipshod.”

The bureau was a division of the Board of Estimate, James Felt the city’s former land use and budgetary body. Most of the properties the bureau sold were ones that city agencies no longer needed and had turned over to the Board of Estimate.

Felt, a real estate analyst and developer, became City Planning commissioner in 1956, and was tapped two years later to lead the Bureau of Real Estate after the allegations of poor management.

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heavyweight group of New York City money men including a former mayor, a prominent real estate executive and a top banker formed the nucleus of a reconfigured George A. Fuller Company, a national construction firm that was one of the first of its kind, 114 years ago this month.

The reorganization followed the death of George Fuller, the co-founder of the original company, which he launched in Chicago in 1882 and expanded to New York in 1896. Fuller died in 1900, and his son-in-law, Henry Black, organized the new company.

The New York executives boosted the coffers of the reconfigured corporation with $20 million in capital, allowing it to expand its skyscraper-building capabilities.

The Fuller company announced earlier that month that it would build what would become the Flatiron Building south of Madison Square Park.

Henry Morganthau The executive committee of the new firm included former mayor Hugh Grant as well as one of the city’s largest real estate developers, Henry Morganthau, both from the Central Realty, Bond and Trust Company. In addition, it included James Stillman, president of Citibank’s predecessor, known as National City Bank.

The firm, which built upwards of 600 buildings, including the original New York Times building and many well-known structures in Chicago, was referred to as a “skyscraper trust,” and competed with the nation’s other large, national firm, Thompson-Starrett Company, based in New York.

In 1902, the Fuller company was merged into an even larger, $66 million concern, United States Realty and Construction, but continued to operate as a separate division.

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Riffing on renderings: Architects debunk the pretty pictures NYC’s top design minds explain tiny Amanda Burdens, God views and more

BY TESS HOFMANN uried in the frenzy that typically greets the release of a batch of renderings for a major project is an uncomfortable truth: The images are heavily manipulated views, with questionable authenticity.

While renderings serve as an effective means to communicate an architectural vision to the public, there are certain design elements that should be viewed critically, architects say.

“It would do the public some good to be always a little skeptical of a rendering … maybe squint their eyes and imagine a rainy day, or question whether the entire promise of the architecture is going to be delivered,” said Marc Kushner, cofounder of architecture firm HWKN. The issue of realism in architectural representation is a dilemma that has plagued architects since the Renaissance, according to FXFowle partner Dan Kaplan. Even today, the jury is out on whether buildings should be represented in their idealized state, or in a more “realistic” fashion, he said.

Below are some common rendering techniques and shortcomings used to sway unsuspecting viewers.

B

be incorporated, Kushner is skeptical. “It’s going to be covered by greenery — somehow.

It doesn’t necessarily need to be explained how. That’s the thing about renderings. You’re looking at the final effect, rather than how.”

FXFowle’s Dan Kaplan said elements like the sloped façade of 35XV, which he designed for Alchemy Properties, are difficult to convey in two dimensions.

Placing people

Clear as glass Glassy buildings are particularly susceptible to misinterpretation, experts said.

“When a building has a lot of glass, there’s a lot of range as to how that glass can be rendered and that certainly can affect the accuracy of what the depiction looks like,” said Moris Adjmi, founder of Moris Adjmi Architects. “There’s a lot more glass on buildings now. How transparent the glass is rendered and the reflections can make a big difference.”

FXFowle’s Kaplan agreed. “Glass is the trickiest thing, because it’s chameleon-like and sometimes it can be very dark and black and other times it can reflect the sky. I think there is the greatest manipulation of glass in general,” he said.

Ken Hudes, principal of Atelier New York Architecture, pointed out that if one looks at a glass building during the daytime, the windows are all black.

“You don’t see into a building typically in the daytime,” he said, “but in a rendering, you want to show some transparency, so that’s not exactly realistic.”

At dusk Many architects favor the twilight hour for renderings, because it is a time of day when it’s possible to realistically see the inside and the outside of a building simultaneously, creating an appealing dynamism.

“There was a period of time when almost every rendering was shown at dusk,” Kaplan 84 March 2015 www.TheRealDeal.com

Dusk is a popular time of day for renderings, as in Moris Adjmi’s design for 36 Bleecker Street, left. Head-on views, like that of the entry at Greenwich Lane, right, designed by FXFowle, are used to emphasize details.

When people become part of a rendering, it can open up a whole can of politically incorrect worms. While most architects want the avatars to look happy, healthy, and attractive, biases can creep in when choosing ethnic or body types.

“You want to make sure that it looks like a New York street and that it’s got the diversity of a New York street,” Kaplan said.

Hudes was more direct. “We try to keep it multicultural. There are all different colored people in there,” he said.

Hudes believes that placing people in a rendering can make all the difference in the world, and half-jokingly credited the strategic placement of a grandfather holding his granddaughter’s hand for his firm’s winning a 9/11 memorial design competition in Huntington, Long Island. “I wouldn’t be surprised if that’s how we won,” he said.

Kushner noted that placing people in a rendering in a moment of celebration can create an “element of drama.”

Digital people also present an irresistible opportunity for inside jokes. According to Kaplan, there was a stretch of time when it was common to see a tiny likeness of Amanda Burden, the glamorous former director of the City Planning Commission, rendered inconspicuously among the crowd.

Head-on views

The FXFowle design for Place de la Cite in Montreal, left, used snow to add some atmosphere. It was never built. HWKN’s design for Journal Squared in Jersey City uses people in the rendering to add drama.

said, “because you get both the reflectivity of the glass and the reflection of the warmth of a glowing sky. It’s a way to get some warmth into glass buildings, he said, “but at the same time, at dusk, you turn the lights on so you can see into the building.”

God views Views from above are an effective way to show a building in its surroundings, but don’t necessarily communicate the human experience of a building, according to Hudes, who used to sneak into nearby towers to take photos of his sites.

“We’re not God and we’re not birds,” Kushner said. “You can ask yourself: ‘Is this a view I will ever see as a citizen of a city?’ If it’s not, maybe that’s not really the way to ingest a project.”

A related perspective is the hovering

view, which is an angle from three to five feet outside of a building looking in. “There’s a beautiful [rendering] of 35XV that shows the sloped façade, which is a very hard thing to convey in two dimensions,” said Kaplan, who designed the building for Ken Horn’s Alchemy Properties. “It shows what the experience would be from inside and at the same time shows the look or impression from the outside,” said Kaplan. He also noted that this view is, in real life, reserved for birds.

Green washing According to Kushner, there was a trend that has “passed a little bit” in which New York City building facades were inexplicably covered in “growy green things,” as if the buildings were sprouting “like we’re in Rio,” he said.

As for how this landscaping would actually

Straight-on views of a building, known as “elevational” angles, are experiencing a resurgence, especially for facades that have a lot of detail to show off.

“In a way, it’s a fair representation of the building because you’re not pretending that it’s going to look like this at a certain point from the sidewalk,” Kaplan said.

Adjmi enjoys vignettes, or close-up renderings that showcase details like entries, canopies, lighting, or places where two different materials meet.

Storybook weather While conventional wisdom is to show a building on a sunny day, even snow can be used to create an artful and inviting image. For a FXFowle proposal for a building in Montreal, the firm went this route. However, the building did not make it past the design phase.

“It was atmospheric,” he said. “It would be June but we’d say, ‘Nah, let’s show it snowing!’

We’d laugh every time … It was well-rendered snow.” TRD www.TheRealDeal.com January 2014 35

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ARCHITECTURE REVIEW

|

JA M E S G A R D N E R

Magnificent in NoMad

The top-heavy new Virgin Hotel displaces a ghost — and might be heavenly

T

he Virgin Hotel New York that will soon rise at the corner of 30th Street and Broadway will change forever the stretch of Broadway that runs from Madison Square Park to Greeley Square. And, if the renderings are to be trusted, it will be a magnificent piece of work.

I am inclined, however, to hedge my bets. Two things can go wrong in a building like this. First, it can be so poorly made that, even if technically it conforms to all or most of the details of the rendering, the totality of the result will look surprisingly unimpressive.

Second, the skill of the artist who created the rendering may surpass the skill of the architects who designed the structure. The rendering looks wonderful, but in it the hotel is seen from below looking up — the sort of angle that cinematographers call an “epic shot,” pioneered in the early days of Soviet Cinema as a way to transform even the common man into a hero.

For now, however, I am optimistic, especially in the knowledge that however it turns out, this 38-story hotel will surely be better than what it replaces. Designed

by VOA Architecture and developed by the Lam Group, it is destined to rise over the ghost of a featureless and unadorned three-story, mid-20th century building.

The Virgin Hotel arrives in an area that, likely because of zoning issues, has become far more welcoming of hotels than of the residential developments that have taken over the rest of the city.

It is one block north of Ace New York ( just off Broadway) and two blocks north of the Nomad Hotel at Broadway and 28th Street.

But whereas those hotels are distinctly boutique-y and were created by revamping preexisting Beaux-Arts structures, the Virgin will be an entirely new building.

In fact, it promises to be one of the bigger hotels in the city, with 460 guest rooms, not including “concept suites.” Among its amenities will be a rooftop bar and swimming pool and a spa. At its base, it promises high-end retail, which, as of today, risks looking stunningly out of place across the street from the wholesale cosmetic and perfume stores and small-time importers that have defined the area for decades.

Surely this new hotel will stand out strikingly, perhaps awkwardly, among the far smaller and older buildings that will surround it. It is by no means a subtle or understated structure; rather, it announces itself with all the force of a polemic. It has a sort of “Mad Men”-era massing that revels in bulk and bullying presence, almost recalling the Pan Am (now MetLife) Building. In sartorial terms, this would be

86 March 2015 www.TheRealDeal.com

a zoot suit. If it were a car it would be — and I say this by way of praise — the sort that gets “really lousy mileage.” It might even have fins.

The hotel is conceived in two main parts.

It has a five-story base, an intricate, transparent sequence of glassy squares and rect-

(at the time Polshek Partnership Architects) and completed in 2009. That much-praised building — although completely modernist in its vocabulary — was also aggressively historicist in its resuscitation of ’70s brutalism and in its domineering presence. It is hard to imagA rendering of the Virgin Hotel New York, designed

by Brian McFarland (inset, top) of VOA Architecture and to be built by John Lam’s (inset, bottom) Lam Group.

angles. By contrast, the upper levels (by far the bulk of the building), read as a shifting mass of deconstructed planes, such as can be seen in many developments around the city over the past 10 or so years. Yet if there is one building that serves as the direct antecedent to this work, I would suggest the excellent Standard Hotel on the High Line, designed by Todd Schliemann, now of Ennead Architects

ine that it was not fully present to the minds of the designers of the Virgin Hotel New York.

It is interesting indeed that both the interiors and the overall structure of the hotel, which is scheduled for completion in 2017, were designed by a firm that, apparently, has not built anything before in New York City. VOA Architecture, founded in 1969

by Wilmont Vickrey, does not seem, prima

facie, to be the sort of firm to which New York developers usually turn these days when they are after something of a more cutting-edge nature. Heretofore, its buildings, mostly of a corporate and institutional — that is to say, anodyne — nature, have been decidedly safe, if not thoroughly cooperative with the tastes and ambitions of the developers. Among VOA’s hotels to date, the Agua Caliente Casino Resort Spa, in Rancho Mirage, California, seems pleasantly contextual, as does the Westin Chicago North Shore.

At the same time, the firm’s projects can display a surprising sensitivity.

In the House of Sweden Embassy in Washington, D.C., the firm showed an inventive use of wood, clearly used to foster a Scandinavian feeling, along with all the simple, organically flowing spaces long a staple of Scandinavian design.

But now, all of a sudden, VOA Architecture has come out with a powerful statement for the Virgin Hotel New York.

Assuming that I am not merely misreading their rendering, the structure promises to be so top-heavy that it looks as though it might keel over from the weight.

The summit, 38 stories up, is appreciably wider than the base, its topmost bulk extending in a series of cantilevers north and south over the lower sections of the building. The result promises to be an unusually dramatic and imposing building in a neighborhood that, to date, has been surprisingly drab and colorless. Its volumetric assault upon the senses will certainly compel the attention of many a pedestrian who has become used to the oppressive drudgery of this stretch of Manhattan.

However, as so often in New York City, even good designs can go awry through the plague of value engineering. That VOA is not immune to such things is evident in their office building at 815 Connecticut Avenue in Washington, D.C. That building is quite well designed, but the actual construction of its curtain-walled surface, arrayed with string coursings along its height and length, looks far less inspired in realty.

One can make the point, of course, that almost anything is better in that Broadway space than the drab building it will replace. And one can also point to other buildings — and rather bad ones — in the general vicinity.

If the Virgin Hotel New York is as prepossessing as it appears in the rendering, then it will be a notable addition to this neighborhood. But if it proves to be not as expert in the execution as in the conception; if it is, indeed, value-engineered, then the fabric of this part of the city will be damaged by a new building out of all proportion to its neighbors. TRD

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Q&A

Lending in a volatile time Manhattan lenders grapple with more competition, complicated by new Dodd-Frank rules

BY ANDREA CETRA he Manhattan residential mortgage lending industry faces a host of new challenges: More players entering the market, finding financing for foreign nationals, incorporating the changes introduced by Dodd-Frank and greater competition for jumbo loans among them.

As Rolan Shnayder of Citizens Bank sees it, the biggest test for the industry is when foreigners seek to buy numerous properties here. “If somebody buys a second home, well, that you can finance. If someone buys numerous properties here, finding them financing … has been challenging. Not impossible, but challenging.”

Firm new rules designed to make sure that homeowners avoid mortgages they can’t afford went into effect last year amid fear that the regulations, while well-intentioned,

T

Melissa Cohn

Independent Mortgage Consultant What are some of the most notable trends in the mortgage industry now?

The most noticeable trend in the mortgage industry now is the changing face of who the lenders are. In the past year, we have had many new lenders enter the New York City marketplace. Some have the sharpest pricing. Some are more willing to lend in buildings that don’t meet Fannie Mae/Freddie Mac standards. There are also new lenders that have mortgages to help qualify self-employed borrowers. With the onslaught of new lenders, all banks will be forced to be more competitive if they want to lend here.

This is the year that the Federal Reserve is finally expected to raise short-term interest rates. How do you think that will affect the mortgage market?

As rates go up, the refinancing marketplace will dry up and buyers will have a lower borrowing capacity, reducing their purchasing power. We will have to see buyers accept that the rate will go up. Rates today are still historically low and will not go back to their high levels of past decades.

As an aside, I started in the mortgage world in 1982 (I hate dating myself ), and New Yorkers were buying and borrowing with one-year ARMs [adjustable-ratemortgages] at 15 percent.

Federal rules took effect a year ago designed to ensure that homebuyers avoid mortgages they can’t afford. Did the new rules have any impact on the Manhattan market?

The new rules did impact the Manhattan market. All borrowers have to qualify with no more than 43 percent of their gross income. Payments on credit cards, depending upon the borrowers’ liquidity, 88 March 2015 www.TheRealDeal.com

can now be the full-outstanding balance, taking many out of the marketplace.

In addition, qualifying for an interestonly loan has gotten much tougher, with borrowers having to qualify using a 20-year amortizing loan and not the significantly lower interest-only payment, once again eliminating more buyers. Banks have also raised the bar on minimum credit scores for the best rates.

Very few exceptions are made today … aside from new portfolio lenders, who are more lenient.

Ben Bernanke, the former chairman of the Federal Reserve, revealed in October that he had trouble refinancing his mortgage after he changed jobs.

His past employment aside, how could someone with a high income have trouble getting a loan?

With today’s guidelines, one has to be selfemployed for two years in order to use that income, no matter how high it is. Bernanke earned a salary of about $200,000. Now he can make that much with just one or two speeches, but he has only been selfemployed since January 2014 and has not yet filed a tax return validating his higher income. He is a year away from being able to use his new income level.

What’s the level of refinancing activity in New York City today and how does it compare to a year ago, and to the last couple of years in general?

Refinance volume in January 2015 surged to 51 percent of all volume, up from 43 percent in December 2014 and the low of 32 percent in July 2014. Today’s levels haven’t been seen since 2013.

What kinds of documentation do banks want to see now?

Banks today want everything except your shoe size. Banks look for two years of income verification. Pay stubs, W-2s and tax returns for the salaried buyer. Credit is also monitored more closely, with

would squash the availability of credit and unsettle the housing market. Part of the DoddFrank financial reform law was the creation of a new category, called “qualified mortgages,” or QM, codifying the separation of prime loans from subprime, among a long list of other restrictions.

The federal rules and regulations associated with Dodd-Frank “have changed our industry more in the past few years than I can remember ever taking place,” said Art Saitta, assistant vice president at Ridgewood Savings Bank. As a result, potential borrowers fear their ability to obtain a mortgage. Some of that fear is misplaced, Saitta said. “Most buyers in the Manhattan market are very finance-savvy, and most of the borrowers we see in this marketplace have consistent forms of income.”

For more on those challenges and others, we turn to our experts.

explanations required on all recent inquiries, and proof that no other credit was obtained. These rules are the toughest we have seen in the past few years.

What do lenders want to see when considering making a loan to a freelancer or small business owner?

As a self-employed borrower, banks require that you be in the same business and show income for the two-year period.

If income is lower in the most recent year, the lower income is used. They may make an exception if a borrower remains in the same field of business and then may require less than two years. Banks will also look at income that may not be recurring and reduce income by that amount. This rule actually applies to all borrowers.

How is the mortgage industry doing compared to three months ago, six months ago, a year ago and the last few years in general?

The mortgage industry is doing much better in the past three months, with historically low rates. The last quarter of 2013 and the first half of 2014 were tough.

This was a result of understanding the new lending standards and interest rates.

Mortgage rates were three-fourths of a point lower at the end of 2014 than they were in January 2014.

Art Saitta

Assistant vice president, residential business development officer Ridgewood Savings Bank How much are mortgage issuances up or down by in NYC in general?

And how much are they up or down by at your company?

We have witnessed more lenders making mortgage products available in NYC during the past two

years. We definitely had less competition up to two years ago with co-op loans and jumbo loans. National lenders are making co-op loans and more are making loans above $1.5 million, which is definitely needed in Manhattan and the outer boroughs.

This is the year that the Fed is finally expected to raise short-term rates. How will that affect the mortgage market?

I have been in this business when rates were at 16 percent for a fixed-rate loan and the purchase-money business was steady. As a matter of fact, until the past seven years, the days when rates fluctuated between 9.75 percent and 10 percent were some of the busiest days I can remember.

Did the Federal rules that took effect a year ago have any impact on the Manhattan market?

The laws and regulations associated with Dodd-Frank have greatly impacted the residential lending arena. The disclosures and guidelines have changed our industry more in the past few years than I can remember ever taking place. The hype behind these changes has made many potential borrowers worried that they cannot obtain a mortgage; yet, many of those fears are unwarranted. Most buyers in the Manhattan market are very finance-savvy and most of the borrowers we see in this marketplace have consistent forms of income, substantial reserves, and see Manhattan as not only a good place to live but also a good long-term investment.

Mortgage applications have been flat in recent years while home sales have been on the rise. Can you help explain this disconnect?

Mortgage applications look flat or declining because our industry compares it to when the refinance boom was taking place. Purchase-money loans are on an increase and have been for more than

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Q&A the past year. It is true that there are fair shares of all-cash transactions, especially with foreign investors, but if you compare the purchase-loan business year-overyear, there definitely is a steady increase in business.

How is the mortgage industry doing in general?

In general, the mortgage industry has undergone tremendous flux. For many years, lenders were primarily closing refinance loans and not preparing for the surge to end, so when the refinance business slowed down, many lenders needed to lay off employees.

Rolan Shnayder

Loan officer, Citizens Bank What are some of the most notable trends in the mortgage industry?

Banks are allowing loans to be done at higher-loan-tovalue ratios, which means people put less down at higher loan amounts. Even on the jumbo mortgages, there are more and more banks allowing less percentage down. I’m seeing loan amounts at $2 million or $3 million with 10-to 15 percent down. This isn’t for everyone.

What are the biggest challenges facing the NYC mortgage industry today?

There have been a lot of foreign nationals making purchases here, and finding financing for those purchases has been a challenge. If somebody buys a second home, well, that you can finance. If someone buys numerous properties here, finding them financing for these numerous properties and investments has been challenging. Not impossible, but challenging, and the rates for those types of deals are higher than what people expect to pay because normally interest rates are low but not if you are buying property as a foreign national.

We keep hearing about the high number of NYC buyers paying all cash. But how common is it for those buyers to finance the purchase once the deal closes?

There is a misconception that if you sign an all-cash offer that means you have to actually show up to closing with all cash, which is not true. If you sign a contract that is an all-cash contract, all that means is that you have to show up to closing with all of the money. Whether that money comes from a mortgage or not is not regulated by your contract. If you don’t find financing and can’t close without it, you stand to lose your deposit. There are plenty of people that sign an all-cash contract and get a mortgage in order to purchase the home anyway. The buyer is still getting all cash, 108 September www.TheRealDeal.com 90 March 2015 2014 www.TheRealDeal.com

whether that’s from your bank account or from the bank, it doesn’t matter.

What kinds of down payments and documentation do banks want to see now?

And how does that compare to the last couple of years?

I think they are checking under every rock to try and find a reason to not do the deal, and I think it takes a sophisticated loan officer to know how to navigate the mortgage process.

Lenders loosened the rules governing jumbo loans last year. What types of borrowers now qualify who didn’t qualify in the past?

More banks are concentrating on the jumbo market. The thirst for jumbo mortgages has increased, whereas before most banks were just trying to do more conforming loans because they wanted to sell them off to Fannie Mae. Now banks are more interested in holding those jumbo loans on their own books.

Shaul Betesh

Senior vice president of mortgage lending, Guaranteed Rate What are the biggest challenges facing the NYC mortgage industry today?

Due to high housing costs here, most mortgages in New York City are jumbo, and requirements that were implemented last January call for additional scrutiny during the mortgage process. The other big challenge we face relates to co-op and condo approval. National loan guidelines can be difficult to conform to in Manhattan and Brooklyn, so ensuring that a loan is eligible requires both the preapproval of the client and of the project, which can require our having to gather information from a management company.

If the Fed raises short-term interest rates, how do you think that will affect the mortgage market?

If rates increase, it will reduce the number of refinance applications for the mortgage market, but may have a positive impact on the purchase market here. If rates go up, making it less desirable for some to purchase, [that] may offset the current lack of inventory.

Matthew Hackett

Mortgage risk manager, Equity Now What are the biggest challenges facing the NYC mortgage industry today?

Condo projects face the biggest challenge when it comes to the New York City area.

Due to the size of the agencies (Fannie Mae and Freddie Mac), condo project underwriting standards are general in nature, by necessity, and can miss the nuance of a building in New York City, where the original sponsor still owns more than 10 percent of the units, which are rented to [rent-] stabilized or controlled tenants. This can make it much more difficult for a borrower to qualify for conventional conforming guidelines, possibly pushing them to a local bank or into a [loan] product that may require a higher down payment or a higher interest rate.

New federal rules designed to ensure that homebuyers avoid mortgages they can’t afford took effect a year ago. Did the new rules have any impact on the Manhattan market?

The new rules, most commonly referred to as QM/ATR, have had an effect on the Manhattan market. While it is true that many co-op boards have more stringent guidelines than banks regarding debt ratios and loan-to-value ratios, the documentation requirements and guidelines around QM/ATR are strict and sometimes difficult to interpret, causing ambiguity in the loan approval process. The inability to get comfortable with the risk of a particular product causes lenders to originate loans with an abundance of caution, reducing the availability of credit. It is noteworthy that these regulations have no ceiling, so they are applicable to a $10 million [loan] as well as a $100,000 loan.

Have the outer boroughs felt more of a squeeze from tighter lending?

The tighter lending environment may have affected the outer boroughs more, in the sense that property values tend to be lower and there is very little wiggle room for borrowers of “conforming” loan amounts, i.e. those that will be sold to Fannie Mae, Freddie Mac or insured by the FHA. There is still some leeway in the lending process for those with private banking relationships.

How could someone like Ben Bernanke, with a high income, have trouble getting a loan?

There are a multitude of other issues aside from current income, which affect whether a borrower qualifies for a loan, and if we look at what Ben Bernanke was most likely bumping up against, it was income continuance. If he was leaving his current employer and did not have another employer lined up (and documented), then he would not have continuing income to pay the mortgage.

While it may seem like common sense that Ben would quickly find another job with adequate income to pay his mortgage, federal regulations do not allow us such leeway.

Lenders loosened the rules governing jumbo loans last year. What types of borrowers now qualify who didn’t qualify in the past?

The loosening in jumbo guidelines has been primarily focused on downpayment requirements. A few years ago, loan amounts to $1.5 million would have required a 25 percent down payment, whereas they now require 20 percent, or in some cases, 10 percent down. There has also been a reduction in reserve requirements; whereas the above loan may have [once] required 18 months reserves, it now requires 12 or six months. The level of documentation, and the allowable debt-to-income ratio, has remained static, or even tightened, in some cases.

Brooke Jacob

CEO and chief loan officer, The Everest Equity Company What are some of the most notable trends in the mortgage industry now?

We’re seeing more first-time homebuyers – because homes are now more affordable than they’ve been in several years. Also non-conforming condos are now more financeable, because lenders have opened up to projects that were ineligible heretofore (e.g., incomplete projects, projects with only 35 percent pre-sales, projects with high percentage of investors — including one investor who owns more than 10 percent of units, etc.)

How could someone like Ben Bernanke, with a high income, have trouble getting a loan?

This was a great story. The agencies’ employment guideline is that if a borrower is self-employed, he/she must have a twoyear history of this self-employment.

Fannie and Freddie are pretty stuck on this consistency test. When I told my family this story at the dinner table, my daughter asked, ‘Why would a former Fed Chairman not know the income guidelines?’ Great question, right? I told her he [probably] was looking for a wake-up call to the agencies. Bernanke’s loan denial increased awareness that there are many qualified borrowers who can’t get mortgages.

Which residential buyers in NYC are least likely to get loans these days? And how has that changed in recent years?

A borrower with sufficient assets but who cannot document their income per guidelines. Until recently, stated-income products for high-net-worth borrowers was a great option, but with the introduction of QM and ATR guidelines in January 2014, these programs became unavailable. TRD

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Real estate news in the Sunshine State TheRealDeal.com /miami

REPORT

Canyon Ranch no more Miami Beach’s Canyon Ranch Hotel & Spa got a new name and management firm when Z Capital Partners bought the oceanfront property.

Reverting to its former name, the Carillon Hotel & Spa, at 6801 Collins Avenue, is now managed by a joint venture led

by Thomas Wicky of Z Capital, who previously ran the Breakers in Palm Beach. Other members of the joint venture include Adrian

Breene, developer and creator of the Setai South Beach.

The Carillon will continue to provide the amenities previously offered, including spa facilities, fitness classes and restaurants. Z Capital, which paid $21.6 million for the property, also said it will retain current employees and instructors.

Canyon Ranch is once again the Carillon Hotel & Spa.

Gooooaaaaalllll!!!!

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Paramount Miami Worldcenter is bringing a different amenity to luxury condo living: An outdoor

Miami Worldcenter’s sports complex will include a soccer field.

soccer field, geared to appeal to Latin American buyers.

Daniel Kodsi, developer of Paramount Miami Worldcenter, revealed plans to The Real Deal for the 60-story project, which

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will also include tennis courts, pools and a running course, all part of an outdoor sports complex on the condo tower’s ninth floor recreation deck. Twelve Balinesestyle, two-story villas surrounded by pools and other water features will also occupy the floor.

Inside on the ninth floor, residents can work out in a fitness center or boxing studio or rock out in a “jam room,” complete with drums, guitars, a piano and a recording studio.

On the roof of the curved building, Kodsi and interior designers IDDI have designed a multi-story amenity space, which will include an indoor lounge with 180-degree views. Above it will be an outdoor pool area with a yoga deck and fire pit.

“The main goal of our design is [to offer] unique features,” Kodsi told TRD.

Shore Club going condo New York-based HFZ Capital Group scored $185 million in refinancing for its plan to turn the storied Shore Club into a five-star hotel and condominium.

Cartlon Group arranged the funding through Carlo Slim’s Banco Inbursa. HFZ founder and chairman Ziel Feldman told The Real Deal the 309-room hotel at 1901 Collins Avenue will be recast into 100 hotel rooms and 75 residences.

The developer brought in Isay Weinfeld, a Brazilian architect and de-

Ziel Feldman (inset) plans to transform the Shore Club into a luxury hotel/condo.

signer, to lead the revamp, his first large-scale project in Miami. Enzo Enea will oversee the landscaping.

Feldman said he plans to announce a deal soon to bring in a “five-star hotel brand” to elevate the 1938 oceanfront property.

Sales, with 1-bedrooms starting at $2 million, kicked off during Art Basel Miami Beach.

HFZ paid $175.3 million for the three-acre Shore Club in December 2013. By Ina Cordle

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Snapshots of real estate residential real estate news briefs news from from around the U.S. around the U.S.

REPORT

Related California’s plan for the 1601 Mariposa development in San Francisco’s Potrero Hill neighborhood helped spark activists to call for more density.

New rental developments like DSF Group’s Halstead Square in Vienna, Virginia, aim to draw tenants with luxe amenities like pool rooms and common areas filled with high-tech equipment.

SAN FRANCISCO

Pop singer Jennifer Lopez is aiming to sell her 17,129 square foot, nine-bedroom home for $17 million. Lopez and former husband Marc Anthony purchased the manse in 2010 for $8.2 million. Features include a large dance studio and gym, 20-seat entertainment theater, professional recording studio, eight wood-burning fireplaces, landscaped gardens, a pool and outdoor barbecue area.

Boston

A

n activist group for renters in San Francisco is pushing for maximum density for proposed projects, no matter how expensive the apartments are. Formed last year in response to Related California’s plans to build more than 300 new units in the Potrero Hill neighborhood, the San Francisco Bay Area Renters Federation has sent people to testify at dozens of city hearings in support of development. The group’s stance that more housing

OREGON Cities like Portland boast lower housing costs and strong job growth, making the state a highly desirable place to live.

Oregon is attracting twice as many people as it’s sending away. A study from United Van Lines that tracked 128,000 moves in Oregon found that 66 percent of interstate moves brought residents into the state, rather than taking them elsewhere. CNN Money reported Oregon topped the list of desirable states for a second straight year, reflecting a trend of migration to southern and western states where housing costs are lower — Oregon’s median housing price is just $239,000. Additional draws include temperate climates, easily accessible outdoor activities and job growth above national average rates. Other popular destination states were South Carolina, North Carolina, Florida and Vermont. New Jersey and New York had the highest percentage of moves out of state. They were followed by Illinois, North Dakota and West Virginia.

DELAWARE Apartments going up on Market Street in Wilmington are aimed at drawing young professionals.

Hundreds of apartments are being built in a downtown district of Wilmington, Delaware, best known in recent 94 March 2015 www.TheRealDeal.com

Los Angeles

at all price points is needed to address the shortage of affordable housing in the city reflects arguments made by other advocates for high-density construction, but is in contrast to the more typical fights against development that crop up in response to building plans. San Francisco’s rents rival New York’s as the highest in the country, with average market rate apartments asking nearly $3,400 per month, an 11 percent jump in the past year.

years for pawnshops and check-cashing stores. The construction is aimed at young professionals, who are more likely to live in urban centers with transit-oriented development that can provide car-free commutes. The Philadelphia Inquirer and the New York Times reported that 380 units are due to pop up along Market Street, the city’s main drag, by the summer of 2016, representing $91 million in private investment in the city with a population of 71,000.

LOS ANGELES An All Coast Construction crew at work on a Southern California home. The surge in home renovations is forcing small companies to turn down offers to bid on jobs.

Remodeling contractors are turning down bids due to an uptick in demand. Michael Grosswendt, owner of Big & Tall Construction’s All Coast Construction in Los Angeles, told the Wall Street Journal he’s too busy to bid on all the jobs he is invited to pursue. The company, which specializes in large scale construction between $5 and $20 million, lately has done many jobs for foreign homeowners looking to put more money into their U.S. properties. That’s just one factor driving the surging remodeling market, which is expected to increase by up to 5 percent this year, to approximately $330 billion, and could top 2007’s $324 billion, according to a recent study from the Harvard University Joint Center for Housing Studies. But growth may be tempered by the fact that the overall U.S. housing market is still struggling. Homeowners are less likely to do pricey renovations if their home equity isn’t growing rapidly.

Compiled by Andrea Cetra

Red Sox slugger David Ortiz listed his three-bedroom, three-bath penthouse in the city’s Brighton neighborhood — not far from Fenway Park — for $3.2 million. The 3,100-square-foot condo features two terraces with sweeping views, a master bedroom with floor-to-ceiling windows and comes with five flat-screen TVs and a surround sound system. A 330-squarefoot deck off the kitchen overlooks three neighborhood baseball fields, where “Big Papi” liked to watch kids play ball.

Palm Springs, California The longtime home of late comedian Bob Hope and his wife Dolores, first listed in 2013 for $50 million, saw its price cut to $25 million. The 23,000-squarefoot 10-bedroom home features a futuristic design that includes a curving copper roof that some say resembles a UFO. The property also includes two pools, putting greens, tennis courts and a spa.

Washington, D.C. Paul Tagliabue, the National Football League commissioner from 1989 until 2006, listed his 5,040-square-foot brick Colonial home in the Burleith subdivision northwest of Georgetown for $3.195 million. The five-bedroom, six-bath home features wood floors, arched windows, a large master suite, two fireplaces, decks and terraces with two-car garage. The private, gated community boasts a pool, tennis and play areas.

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Deal Sheet summary

The Deal Sheet, on pages 98 to 110, covers transactions from 1/12/15 through 2/13/15.

Please submit future deals to deals@therealdeal.com.

Overview Property sales

Financing

Leases (# of deals)

Leases (square feet)

Deals

67

Transactions

28

Office

44

Office

118,310

Dollars

1,974,170,000

Aggregate value

1,369,350,000

Retail

31

Retail

969,129

Total

75

Total

1,087,439

Sales

By dollar volume (in millions)

By type

Other

15

5

Office

Retail Development site

27

2.5

Hotel Mixed-use

225.3

1

Multi-family

Office

55

11

Multi-family

Other Retail Development site Hotel

.3

12

47 .

6

4.2 24

22

Mixed-use

698

1

45

22

.4

Office leases Office leases by industry Industry

Office leases sf, by industry Number of deals

Industry

Top tenant reps for office leasing, by sf Leased square feet

Broker

Leased square feet

Advertising/Marketing

4

Advertising/Marketing

218,585

Colliers International

200,000

Education

1

Education

12,400

CBRE

170,500

Entertainment

1

Entertainment

2,798

Byrnam Wood

100,000

Fashion*

2

Fashion*

1,998

Cushman & Wakefield

89,000

Finance

6

Finance

265,135

Colliers International

80,000

Food & Beverage

3

Food & Beverage

34,876

Wixen Real Estate

80,000

Health & Beauty

1

Health & Beauty

100,000

JLL

62,936

Media

2

Media

106,782

Cresa New York

38,407

Other

18

Other

161,785

Sinvin Real Estate

33,560

Real Estate

2

Real Estate

31,586

Newmark Grubb Knight Frank

27,711

Retail leases Top tenant reps for retail leasing, by sf Broker

Leased square feet

Retail leases by industry Education

Crown Retail Services

11,334

Augenbaum Realty Corp

10,800

Health & Beauty

NYC Prime Realty

10,800

11

8

Other

3

JLL

7,264

Kalmon Dolgin Affiliates

6,200

Fashion

1

Cushman & Wakefield

3,800

96 March 2015 www.TheRealDeal.com

13

Finance Fashion

505

1 81 , 34

2,

50

0

4

Finance

2

18,88

Entertainment

00

7,969

Other

86

RFK

Health & Beauty

9,4

7,971

3

Education

2,

Pliskin Realty & Development

Entertainment

Food & Beverage

8

Food & Beverage

18,510

4 ,3

25,014

Winick Realty Group

49

Miyad Realty

Retail leases sf, by industry

(*includes showroom space)

THE REAL STATE OF REAL ESTATE

M AG I C MARKET, M AG I C C I T Y

Buying or selling is a big deal. It’s not just about months of inventory, absorption rates, and enough graphs and stats to make your head spin.

It’s about making the story of our real estate market relevant to you, demystifying industry jargon and explaining, in universal terms, how and why market trends affect your decision to buy or sell. It’s about where Miami real estate has been, where it is now, and how it’s moving into its big, bright future.

When the Magic City calls, you’ll want to know what to expect. That’s where we come in.

2 01 4 M I A MI REA L ESTAT E M A R K E T REP O RT N OW AVA ILA B LE FOR FULL REPORT, VISIT

oirfl.com/reports or call 305.615.1376 to receive a printed copy

™

2060 N Bayshore Drive Photo Credit: Kevin Coster

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Miami, Florida 33137 © 2015 Opulence International Realty

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought.

The Deal Sheet covers transactions from 1/12/15 to 2/13/15. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1345 Avenue of the Americas

200,000

Fortress Investment Group / Howard Grufferman, Colliers International

n/a / n/a

The investment management firm signed a 15-year renewal and expansion lease and will occupy a total of 200,000 sf on the 23rd, 26th, 45th, 46th and parts of the 47th floors.

28-40 West 23rd St

100,000

Estée Lauder / Sacha Zarba and Greg Tosko, CBRE

23rd Street LLC / Andrew Roos, Colliers International

The cosmetics company signed an expansion lease and will occupy a total of 166,000 square feet.

1675 Broadway

100,000

Publicis Groupe / Joseph Thanhauser and Gordon Ogden, Byrnam Wood

Rudin Management / Robert Steinman, Rudin Management

The global advertising agency signed an expansion lease and will occupy a total of 580,000 square feet on the second through 16th floors and 24th through 30th floors.

770 Broadway

80,000

Facebook / Bob Tunis, Colliers International; Warren Wixen, Wixen Real Estate

Vornado Realty Trust / Glen Weiss, Vornado Realty Trust

The social media company signed an expansion lease and will occupy a total of 270,000 square feet. The reported asking price was $100 per square foot.

450 West 33rd St

52,350

IPG / Scott Panzer, JLL

Brookfield Office Properties / Bruce Mosler and Josh Kuriloff, Cushman & Wakefield

The advertising agency signed a 15-year expansion lease and will occupy a total of 278,000 square feet.

387 Park Ave

40,000

Criteo / Sacha Zarba and David Hollander, CBRE

TF Cornerstone / Matt Leon, Newmark Grubb Knight Frank

The digital advertising firm signed a 10-year lease. The reported asking price was approximately $70 per square foot.

114 Fifth Ave

40,000

Capital One / Dale Schlather, Cushman & Wakefield

L&L Holding / Peter Riguardi, Frank Doyle, Cynthia Wasserberger, Jon Schifrin, JLL

The bank signed an eight-year lease to occupy the fifth and sixth floors.

The reported asking price was approximately $80 per square foot.

85 Broad St

38,407

Year Up / Mark Jaccom and Ed Wartels, Cresa New York

MetLife Inc. and Beacon Capital Partners / Peter Riguardi, Frank Doyle, Cynthia Wasserberger, Jon Schifrin, JLL

The Boston-based nonprofit signed a 15-year lease.

200 Lafayette St

33,560

Chobani / Christopher Owles and James Costello, Sinvin Real Estate

General Growth Properties / Paul Amrich, Neil King, Patrice Meagher CBRE

The yogurt company signed a lease to occupy the sixth and seventh floors.

The reported asking price was $85 per square foot.

620 8th Ave

31,000

Bounce Exchange / Mitchell Barnett, Richard Serko, Bill Lee, Cushman & Wakefield

New York Times / Ramneek Rikhy, Arkady Smolyansky, Tighe, Greg Tosko, Sacha Zarba, CBRE

The technology company signed a lease.

7 Penn Plaza

30,500

Retail Wholesale and Department Store Union / Brian Gell and Laurence Briody, CBRE

The Feil Organization / David Turino, The Feil Organization

The retail worker’s union signed a 15-year lease to occupy the fifth and fourteenth floors.

350 5th Ave

26,782

Media General / James Gross and Peter Gross, Douglas Elliman

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Jonathan Tootell and Shanae Ursini, Newmark Grubb Knight Frank

The media company signed a lease.

841 Broadway

26,235

Centro / John D. Ryan III, Konstantine T. Sepsis, David Cohen, Avison Young

The Feil Organization / Robert Fisher, The Feil Organization

The technology company signed a lease.

4 West 125th St

25,000

Children’s Aid Society / Andrew Silvester and Randy Sherman, MHP Real Estate Services

Olam Trading Corp. / Paul Walker, CBRE

The nonprofit signed a five-year lease to occupy three floors. The reported asking price was $45 per square foot.

41-61 Kissena Blvd (Queens)

23,000

CyraCom / n/a

Muss Development / n/a

The health care translation service signed a 12-year lease. The reported asking price was approximately $40 per square foot.

350 Park Ave

21,000

Square Mile Capital / David Falk and Peter Shimkin, Newmark Grubb Knight Frank

Vornado Realty Trust / n/a

The real estate financial firm signed a lease and will occupy the entire 15th floor. Square Mile is subleasing the space from Ziff Brothers Investments.

10 East 53rd St

18,000

Swarovski / Mark Mandell, Cushman & Wakefield

SL Green / Paul Glickman and Cynthia Wasserberger, JLL

The crystal-jewelry maker signed an 11-year-plus lease to occupy the 26th and 27th floors.

120 West 45th St

15,667

Strategic Funding Source / Benjamin Blumenthal, Bobrow and Company

DeVry University / Elizabeth Houley and Erica Rubinstein, Newmark Grubb Knight Frank

The financial services company signed a lease to occupy the entire second floor and part of the sixth floor. The reported asking price was $70 per square foot.

32-10 Jamaica Ave (Queens)

12,400

School Construction Authority / Cassidy Turley

132-10 Jamaica Ave Realty Corp. / Dmitri Gourianov and Neil Firtle, Kalmon Dolgin Affiliates

The tenant signed a lease to occupy the entire one-story warehouse and will convert the space into a Pre-K school for approximately 100 students.

505 Fifth Ave

10,586

Corigin Holdings LLC / Alexander Chudnoff, JLL

n/a / Paul Glickman and Diana Biasotti, JLL

The tenant signed a five-year and two-months early renewal lease to occupy the entire 22nd floor.

373 Park Ave South

8,732

Advanced Focus / n/a

ATCO Properties & Management / n/a

The recruiting house signed a five-year extension lease to occupy a portion of the 8th floor. The reported asking price was $52 per square foot.

112 West 34th St

6,711

J.J. Operating Corp. / Michael Frantz, Newmark Grubb Knight Frank

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Scott Klau, Erik Harris, Neil Rubin, Newmark Grubb Knight Frank

The financial services company signed a renewal and expansion lease.

510 Gates Ave (Brooklyn)

5,000

CASES / M.C. O’Brien Inc.

Center for Human Services Inc. / n/a

The nonprofit signed a lease.

411 Fifth Ave

3,985

Beauty Solutions / David Levy, Adams & Co

411 Fifth Avenue Associates / David Levy, Adams & Co

The beauty company signed a four-year renewal lease. The reported asking price was $48 per square foot.

90 Broad St

2,798

New Music USA / Amy Lawrence, Denham Wolf

n/a / Broad Street Plaza, LLC

The music organization signed a lease.

1115 Broadway

1,927

Poppin, Inc / James Buslik and Jeff Buslik, Adams & Co.

Eleven Fifteen Associates / James Buslik and Jeff Buslik, Adams & Co.

The tenant signed a five-year renewal lease to occupy the third floor.

The reported asking price was $55 per square foot.

To view more deals visit our website: www.TheRealDeal.com 98 March 2015 www.TheRealDeal.com

ARTIST RENDERING

EXCLUSIVE SELLING AGENT: TIME EQUITIES INC., LICENSED REAL ESTATE BROKER. SALES AND MARKETING CONSULTANT: THE MARKETING DIRECTORS. EQUAL HOUSING OPPORTUNITY. SPONSOR RESERVES THE RIGHT TO MAKE SUBSTITUTIONS OF MATERIAL, EQUIPMENT, LAYOUTS, FIXTURES, FINISHES AND APPLIANCES IN ACCORDANCE WITH THE TERMS OF OFFERING PLAN. COMPLETE OFFERING TERMS ARE IN THE OFFERING PLAN AVAILABLE FROM THE SPONSOR. PRICES AND AVAILABILITY SUBJECT TO CHANGE. FILE #CD13-0282. SPONSOR NAME: 50 WEST DEVELOPMENT LLC, 55 FIFTH AVENUE, NEW YORK, NY 10003.

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5 0 WE S T S T R E E T, N E W YO R K , N Y 1 0 0 0 6

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

110 West 40th St

1,603

Goldstein Company, CPA / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The accountant signed a lease. The reported asking price was $52 per square foot.

552 Seventh Ave

1,400

Chou Chou Baby Products / Jeff Buslik and Seth Godnick, Adams & Co.

Dayan 26-552 / CBC Alliance

The tenant signed a three-year lease to occupy the fourth floor. The reported asking price was $44 per square foot.

110 West 40th St

1,202

KR Intercorp, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The clothing company signed a lease. The reported asking price was $50 per square foot.

110 West 40th St

1,154

Richard Backer, CPA / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The accountant signed a lease.

888 Utica Ave (Brooklyn)

1,036

Tropical Paradise Restaurant & Bakery / n/a

4918 Church Avenue LLC / M.C. O’Brien Inc.

The restaurant and catering hall signed a lease for its third location on Utica Avenue.

320 Fifth Ave

996

Yellowstone Imports Inc. / Jeff Buslik and Seth Godnick, Adams & Co.

Brause Realty / EVO Real Estate Group

The tenant signed a seven-year lease to occupy the ninth floor. The reported asking price was $59 per square foot.

110 West 40th St

957

AllertonFox Construction, LLC / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The commercial construction firm signed a lease.

110 West 40th St

915

Douglas B. Seely, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The tenant signed a lease.

420 Lexington Ave

909

Egar Technologies / Ina D. and Helen D., Capstone Realty Advisors

SL Green / SL Green

The tenant signed a lease.

51 Broome St

900

Missoni Home / Gregory Kim, Veracity Real Estate

n/a / Zachary Baumgarten, Is-Ila Realty Corp.

The home furnishings company signed a multi-year lease.

110 West 40th St

796

Bosideng USA, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The clothing company signed a lease for general and executive offices.

110 West 40th St

619

Jovid Fabrics, INC. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The fabrics company signed a lease for the wholesale of textiles.

110 West 40th St

617

James Yarn Sales Co. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The yarn company signed a lease for general and executive offices.

1 West 34th St

488

Media Shakers / Jeff Buslik and Seth Godnick, Adams & Co.

BLDG Management Co. / CBRE

The tenant signed a five-year lease to occupy the third floor. The reported asking price was $49 per square foot.

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

110 West 40th St

475

Yettpo, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The telephone company signed a lease.

110 West 40th St

342

Think Big Buys, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The tenant signed a lease.

110 West 40th St

280

CRT Restaurant, Inc. / n/a

One Ten West Fortieth Associates / David Levy and Brett Maslin, Adams & Co

The restaurant signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

40 Worth St

25,014

NYC Elite / Michael Rosenrauch, Miyad Realty

Newmark Holdings / Ross Kaplan and Kate Cohen, Newmark Grubb Knight Frank

The gymnastics center signed a lease.

112 West 34th St

11,334

Sephora / Virginia Pittarelli, Crown Retail Services

Empire State Realty Trust / Thomas P. Durels and Fred C. Posniak, Empire State Realty Trust; Joanne Podell and Ian Lerner, Cushman & Wakefield.

The beauty retailer signed a lease.

1601 Kings Hwy (Brooklyn)

10,800

CVS Pharmacy / Josh Augenbaum, Augenbaum Realty Corp; Sol Dweck, NYC Prime Realty

Kingsway Realty LLC / Nick Zweig, Locations LLC

The pharmacy signed a lease.

252 West 37th St

9,800

District Tap / Josh Augenbaum, Augenbaum Realty Corp; Sol Dweck, NYC Prime Realty

Sheva 7, LLC / n/a

The restaurant signed a lease.

221-06 Springfield Gardens (Queens)

7,971

Advance Auto Parts / Marvin Hartman, Pliskin Realty & Development

221-06 Merrick Boulevard Associates / CPEX Realty

The auto company signed a lease.

40-48 Lombardy St (Brooklyn)

6,200

Beverage World / Grant Dolgin, Kalmon Dolgin Affiliates

Gesco Ice Cream Vending Corp. / Jean Cook, Kalmon Dolgin Affiliates

The tenant signed a lease.

452 Fulton St (Brooklyn)

4,500

Adidas / Jeremy Ezra, RKF

Crown Acquisitions, Inc. / Christopher DeCrosta and Isaac Mograby, Crown Retail Services, LLC

The clothing company signed a 10-year lease to occupy the ground floor.

625 Madison Ave

4,400

Diesel / Bob Gibson, JLL

SL Green / Jeff Roseman, Newmark Grubb Knight Frank

The Italian clothing brand signed a 10-year lease for a new flagship store.

243 West 60th St

3,435

New York Empire Baseball / Nick Poshkus, Corcoran

West End Enterprises / Steven E. Baker and Charles Rapuano, Winick Realty Group

The baseball academy signed a lease.

15 West 27th St

3,363

Pondicheri / n/a

The Kaufman Organization / n/a

The Indian restaurant signed a lease to occupy the ground floor.

1700 Hylan Blvd (Staten Island)

3,200

True North Urgent Care / Michael Stone, Cushman & Wakefield

DJ RAB, LLC / Diana D. Boutross, Winick Realty Group

The medical center signed a lease.

250 West 57th St

2,864

HSBC / Craig Slosberg, JLL

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Joanne Podell and Ian Lerner, Cushman & Wakefield

The bank signed a lease.

92-100 Seventh Ave

2,600

Boots & Saddle / Josh Singer, The Heller Organization

Duell Management Company / n/a

The bar signed a 10-year lease to occupy the lower level.

382-388 Union Ave (Brooklyn)

2,500

Scrap Entertainment / n/a

n/a / Barry Fishbach, Alex Beard, Sonya Smith, RKF

The event venue signed a lease.

1 New York Plaza

2,217

Schnippers / Kenneth Hochhauser and Steven E. Baker, Winick Realty Group

Brookfield Office Properties / Steven E. Baker and Kenneth Hochhauser, Winick Realty Group

The restaurant signed a lease.

345 West Broadway

2,200

Marie Lou & D Salon & Spa / Margie Sarway, Sinvin Real Estate

n/a / Simon Goltche and Daniel Rahmani, Venture Capital Properties

The salon signed a long-term lease.

67 South Sixth St (Brooklyn)

2,000

Bia67 / n/a

Kodo Realty LLC / Oren Friedman, DY Realty Services LLC

The Vietnamese restaurant signed a 10-year lease.

One Penn Plaza

1,939

Pret A Manger / Ariel Schuster, Jackie Totolo, Michael Paster, Joshua Strauss, RKF

n/a / Ariel Schuster, Jackie Totolo, Michael Paster, Joshua Strauss, RKF

The restaurant signed a lease.

216 Bedford Ave (Brooklyn)

1,400

Joe’s Pizza / Michael Gleicher and Adam Charness, Winick Realty Group

216 Bedford Kings / n/a

The restaurant signed a lease.

391 Eighth Ave

1,400

Dunkin Donuts / Zach Diamond, Winick Realty Group

391 8th Avenue, LLC / n/a

The restaurant signed a lease.

204 Wythe Ave (Brooklyn)

1,230

Van Leeuwen Artisan Ice Cream / Alex Beard, Sonya Smith, Barry Fishbach, RKF

n/a / n/a

The ice cream shop signed a lease.

116-59 Queens Blvd (Queens)

1,176

DTRT Wireless 3 / Steven E. Baker, Noel Caban, Winick Realty Group

Manton Holding, LLC / Christopher Winchester, Pickman Realty

The wireless provider signed a lease.

203 Seventh Ave

1,050

Blue Bottle Coffee / Julian Hitchcock, F&B Group

Nicholas Estates Realty Corp / Scott Sher, Sabre Real Estate Group LLC; Pan Brothers Associates Inc.

The coffee chain signed a lease.

500 West 30th St

1,012

Think Coffee / Steven E. Baker and Ross Burack, Winick Realty Group

500 West 30th LLC / Steven E. Baker and Ross Burack, Winick Realty Group

The coffee shop signed a lease.

1701 Broadway

1,000

1000 6th Gifts / Patty Holmstrom, Winick Realty Group

Brittania 54th / Patty Holmstrom and Jeeun Kim, Winick Realty Group

The souvenirs store signed a lease.

958 Lexington Ave

1,000

Diamondocity / Faith Hope Consolo and Joseph Aquino, Douglas Elliman

Marolda Properties / Faith Hope Consolo and Joseph Aquino, Douglas Elliman

The art gallery signed a lease.

80 West Kingsbridge (Bronx)

800

Ameritel / Steve Stern, NY Standard Realty

n/a / Steve Stern, NY Standard Realty

The wireless retailer signed a five-year lease.

102 March 2015 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

185 Columbus Ave

600

The Maille Boutique / Steven Soutendijk, Cushman & Wakefield

n/a / Stanley Lindenfeld and Henry Goldfarb, Lee and Associates

The Dijon mustard brand signed a lease for its first Manhattan store.

568 Main St

505

CDM Kids Learning / Hal Shapiro, Winick Realty Group

Hudson Related / Hal Shapiro, Winick Realty Group

The learning center signed a lease.

73 West Houston St

500

Bit’z Kids / Shu Sakae, Furumoto Realty

Manhattan Skyline Management Corp / Joshua Roth, Manhattan Skyline Management Corp

The Japanese baby and children’s clothing company signed a 10-year lease to occupy the ground floor.

122 East 7th St

300

Verdigreen NYC / Brandon Berger, RKF

122 East 7th Street / Joshua Siegelman, Winick Realty Group

The home-goods store signed a lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

1865 Broadway

12-stories, 5-units, 139,739 sf

AvalonBay Communities / n/a

The American Bible Society / n/a

The office building sold for $300 million.The new owner plans to demolish the existing building and build a luxury residential tower with a retail component.

321 West 44th St

10-story, 180,000 sf

Jowa Holdings / Darcy Stacom and Paul Gillen, CBRE

East End Capital / Darcy Stacom and Paul Gillen, CBRE

The office building sold for $165 million.

1185 Broadway, 29 West 28th St

2 bldgs, 181,660 buildable sf

Flag Luxury Properties / n/a

Clark Wile & Mayer / n/a

The two buildings sold for $100 million.

514 11th Ave

3-stories, 162,828 sf, 1,050,500 buildable sf

Silverstein Properties / n/a

n/a / n/a

The retail building sold for $100 million. The developer is planning to build an ultra-tall residential tower.

33 Caton Pl (Brooklyn)

126-units

n/a / David Robinov, Ackman-Ziff

Sam Boymelgreen / David Robinov, Ackman-Ziff

The multi-family building sold for $76 million.

308 East 38th St

22-story, 97-units

Gaia Real Estate and Acro Group / n/a

UBS Realty Investors / n/a

The residential building sold for $75 million.

435-429 Third Ave

9-story, 101-units, 66,000 sf

n/a / n/a

Benchmark Real Estate Group / Steven Vegh, Westwood Realty Associates

The mixed-use building sold for $68.3 million.

330 East 63rd St

92-units, 80,000 sf

Michael Cohen / Richard Guarino and Eric Roth, Friedman-Roth Realty Services

Stonehenge Management / Robert Knakal and Clint Olsen, Cushman & Wakefield

The multi-family building sold for $58 million.

190 Bowery St

6-story, 37,000 sf

RFR Realty / n/a

Jay Maisel / Cushman & Wakefield

The building sold for $55 million.

23-05 & 23-15 30th Ave, 21-80 38th St, 21-81 38th St (Queens)

3 bldgs, 154-units, 118,759 sf total

Kushner Companies / Kushner Companies

RockFarmer Capital / RockFarmer Capital

The three mixed-use buildings sold for $51 million.

281 Park Ave South

6-story, 32,000 sf

RFR Holding LLC / n/a

Federation of Protestant Welfare Agencies / n/a

The office building sold for $50 million.

360, 362, 364, 366, 368 Third Ave

5 bldgs, 70-units total

Itzhaki Acquisitions and Continental Ventures / Dan Shapiro, Matthew Garcia, Alex Frants, The Besen Group

n/a / Dan Shapiro, Matthew Garcia, Alex Frants, The Besen Group

The five mixed-use buildings sold for $50 million.

500 Sterling Pl

77-units

n/a / n/a

Adam America Real Estate and Horizon Group / n/a

The multi-family building sold for $48 million.

470 Broome St

19,000 sf

Thor Equities / n/a

Sicis / n/a

The retail space on the two cellars, ground, second and third floors sold for $45 million.

331 Park Aven South

12-story, 6-units, 37,016 sf

Metro Loft / Neil Helman, Jon Epstein, Vincent Carrega, Charles Kingsley, Jason Meister, Avison Young

Extell Development / Neil Helman, Jon Epstein, Vincent Carrega, Charles Kingsley, Jason Meister, Avison Young

The retail building sold for $40 million. Metro Loft will likely convert the newly acquired property into a condominium.

10 East 33rd St, 12 East 33rd St

2 bldgs, 12-story, 61,100 sf

Dalan Management / Timour Shafran and Phil Fierro, Citicore

Adee Associates / Pavan Uttam, Up Real Estate Advisors

The two office buildings sold for $36 million.

225 Central Park North

6-story, 58-units

RCR Management / n/a

Levites Realty Co. / Aaron Jungreis, Rosewood Realty Group

The multi-family building sold for $33 million.

1525 Bedford Ave (Brooklyn)

2,407 sf, 101,094 buildable sf

Adam America Real Estate / Ofer Cohen, TerraCRG

n/a / n/a

The retail building sold for $32.5 million. The developer plans to build a 133-unit mixed-use building to the site.

428-432 East 58th St

3 bldgs, 22-units total

Bauhouse Group / Adelaide Polsinelli and Andrei Danshes, Eastern Consolidated

n/a / Adelaide Polsinelli and Andrei Danshes, Eastern Consolidated

The multi-family buildings sold for $32 million.

143 Linden St, 2513 Newark Ave, 416, 422 East 17th St, 1617 President St (Brooklyn), 233 East 77th St, 237 West 18th St, 349 East 51st St

8 bldgs, 201,000 sf

Pinnacle Group / n/a

Praedium Group / n/a

The eight multi-family buildings sold for $32 million.

428-432 East 58th St

3 bldgs, 22-units total

Bauhouse Group / n/a

n/a / Adelaide Polsinelli and Andrei Danshes, Eastern Consolidated

The three multi-family buildings sold for $32 million.

191-231 Moore St (Brooklyn)

5 bldgs, 169,497 buildable sf

Heritage Equity Partners / n/a

Cooper Tank and Welding Co. / Stephen Palmese, Cushman & Wakefield

The development site sold for $28.2 million, or $167 per square foot.

314-320 Grand St

4-story, 35,000 sf

Malachite Group / n/a

Amster family / n/a

The retail building sold for $26.5 million.

587-591 Third Ave

3 bldgs, 5-story, 60,000 sf

Charles Blaichman, CMB Developers / Robert Khodadadian, Skyline Properties; Joanna Cutler, Joanna Cutler Real Estate

J.T. Tai Properties LLC / Robert Khodadadian, Skyline Properties; Joanna Cutler, Joanna Cutler Real Estate

The development site sold for $25 million. The developer is building an 18-story 91-unit rental.

781 Metropolitan Ave (Brooklyn)

1-story

Adam America Real Estate / n/a

n/a / 781 Metro Investors LLC

The retail building sold for $23 million. The developer plans to build an 81-unit residential building at the site.

82-84 West 12th St

6-story, 25-units, 20,634 sf

n/a / Aaron Jungreis, Rosewood Realty Group

n/a / Aaron Jungreis, Rosewood Realty Group

The mixed-use building sold for $22.7 million.

8-14 Prince St

4-units, 4,000 sf

Sitt Asset Management / Ivan Hakimian, HPNY

n/a / Ivan Hakimian, HPNY

The four retail condo units sold for $22.5 million.

39-05 29th St (Queens)

136-key

n/a / n/a

Queens Plaza North, LLC / HFF

The hotel’s ground sold for $22.4 million and was leased back to the seller for 99 years.

261 Broadway

12-story, 13,800 sf

Doria family / Moshe Majeski, The Moshe Group

The Klein Group / Moshe Majeski, The Moshe Group

The retail condo sold for $22 million.

104 March 2015 www.TheRealDeal.com

WHERE 19 TH CENTURY ELEGANCE MEETS 21 ST CENTURY SOPHISTICATION 10 BESPOKE CONDOMINIUM RESIDENCES PRICED FROM: $14.5M EXPECTED OCCUPANCY SUMMER 2015

212.535.3260 | 33EAST 74.COM EXCLUSIVE MARKETING AND SALES: DOUGL AS ELLIMAN DEVELOPMENT MARKETING The complete offering terms are in an Offering Plan available from Sponsor File No. CD13-0032. Sponsor: JZS Madison, LLC, 780 West End Avenue, 1E, New York, New York 10025. Property: 33 East 74th Street, New York, New York 10021.

All dimensions are approximate and subject to normal construction variations and tolerances. Plans and dimensions may contain minor variations from floor to floor. Total Unit square footage has been determined using the methodology described in the Offering Plan. Sponsor reserves the right to make changes in accordance with the terms of the Offering Plan. All images are artist’s renderings. Renderings by Neoscape.

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

34 West 17th St

10-story, 25,000 sf

Atkins & Breskin / n/a

Extell Development / Ron Solarz, Chris Matousek, Michael Levine, Eastern Consolidated

The office building sold for $20 million. The developers will convert the building into full-floor residential condominiums.

218 Madison Ave

4-story, 11,373 sf, 35,210 buildable sf

ASRR Capital and Suzer Group / n/a

n/a / n/a

The mixed-use building sold for $18.5 million.

The developers plan to build a 10-story luxury property at the location.

150,165, 220 Trantor Pl (Staten Island)

16 bldgs, 177-units total

n/a / n/a

n/a / Victor Sozio, Shimon Shkury, Michael A. Tortorici, Mark Spinelli, Josh Berkowitz, Ariel Property Advisors

The sixteen multi-family buildings sold for $17.9 million.

31-51 31st St (Queens)

26,000 sf

Astoria 31st Street Developers LLC / n/a

n/a / n/a

The development site sold for $17.4 million.

827-829 Sixth Ave

4-story, 8,045 sf

PJT 827 LLC, PJ 827 LLC, HN 827 LLC / Ryan Horvath, RFK

Malac Stationery & Printing Co., Inc. / Ryan Horvath, RFK

The retail building sold for $16 million.

522-528 Atlantic Ave (Brooklyn)

1-story, 14,150 sf, 57,850 sf of additional air rights

n/a / Stephen P. Palmese, Cushman & Wakefield

n/a / Stephen P. Palmese, Cushman & Wakefield

The retail building sold for $15 million, or $1,060 per square foot, or $260 per buildable square foot.

1-02 26th Ave (Queens)

1-story, 274,260 buildable sf

Durst Organization / n/a

Astoria Equities 2000 LLC / n/a

The development site sold for $15 million.

1377-9 Lexington Ave

5-story, 23-units

n/a / Ivan Hakimian, HPNY

n/a / Ivan Hakimian, HPNY

The mixed-use building sold for $15 million.

85 Wythe Ave (Brooklyn)

1-story

Cayuga Capital / n/a

Colossal / n/a

The warehouse sold for $14.5 million, completing the block-long assemblage where the developer plans to build a 100,000-square-foot office and retail building.

425 Fulton St (Brooklyn)

2-story, 6,100 sf, 30,000 buildable sf

n/a / n/a

n/a / n/a

The retail building sold for $14 million, or $2,295 per square foot, or $467 per buildable square foot.

220 Osgood Ave, 51 Coursen Pl (Staten Island)

2 bldgs, 115-units total

n/a / Marcel Fridman, Barcel Group

n/a / Marcel Fridman, Barcel Group

The two multi-family buildings sold for $13.9 million.

207 West 75th St

14,750 sf

Howard Neu / Timour Shafran and Benjamin Shafran, Citicore

Felipe Coello / Timour Shafran and Benjamin Shafran, Citicore

The development site sold for $13.3 million.

1400 Fifth Ave

9-units, 30,807 sf

Ashkenazy Acquisition Corporation / Lev Kimyagarov, Cushman & Wakefield

Full Spectrum / Lev Kimyagarov, Cushman & Wakefield

The mixed-use building sold for $12.5 million, or $406 per square foot.

436, 442 East 13th St

20,000 buildable sf

Bridgeton & Amirian / Ivan Hakimian, HPNY

Quantano / Ivan Hakimian, HPNY

The two retail buildings sold for $9.5 million.

93 North 9th St (Brooklyn)

10,000 sf

Colt Equities / n/a

Imperium North Ninth / n/a

The retail building sold for $9 million.

204 West 84th St

3-story, 9,175 sf

First Church of Religious Science New York / Matthew Swann, Matthew Swann LREB

Ansonia Properties LLC / Hall Oster and Paul Smadbeck, Cushman & Wakefield

The mixed-use building sold for $8.5 million, or $1,283 per square foot.

(718) 626-4400 | info@metpacproperties.com 106 March 2015 www.TheRealDeal.com

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

295 West 150th St

6-story, 33-units

295 West 150th LGK Associates L.P. / Aaron Jungreis, Rosewood Realty Group

Crp Uptown Portfolio li / Michael Guttman, Rosewood Realty Group

The mixed-use building sold for $7.9 million.

1115 College Ave, 1249 Webster Ave (Bronx)

6-story 44-units, 42,735 sf

n/a / College Webster Realty LLC

Cornell Pace Inc. and College Webster Realty LLC / Amit Doshi, Besen & Associates

The multi-family building sold for $6 million, or $121 per square foot.

264 East 10th St

5-story, 5,500 sf

n/a / Thomas D. Gammino, Jr. and James P. Nelson, Cushman & Wakefield

n/a / Thomas D. Gammino, Jr. and James P. Nelson, Cushman & Wakefield

The multi-family building sold for $5.9 million, or $1,082 per square foot.

7508 & 7524 Broadway (Queens)

7,940 sf

Marcus & Millichap / Matthew Fotis, Lazarus Apostolidis, Tae Lee, Marcus & Millichap

n/a / n/a

The retail buildings sold for $5.8 million.

575, 581 Ocean Pkwy (Brooklyn)

11,200 sf, 42,400 buildable sf

n/a / Derek Bestreich, Steve Reynolds, Thomas Reynolds, Marcus & Millichap

n/a / Derek Bestreich, Steve Reynolds, Thomas Reynolds, Marcus & Millichap

The two development sites sold for $5.7 million. The developer plans to construct a 62-unit rental building.

729 Lafayette Ave (Brooklyn)

17-units

n/a / Bart Zimmermann, Barcel Group

n/a / n/a

The multi-family building sold for $5.4 million.

3084 Webster Ave, 410-414 East 203rd St (Bronx)

93,000 buildable sf

n/a / n/a

n/a / Victor Sozio, Shimon Shkury, Scot Hirschfield, Jason M. Gold, Ariel Property Advisors

The development site sold for $4.1 million.

59 Nagle Ave

26-units, 21,080 sf

n/a / Ben Kolman and Scott Jacobs, NY Standard Realty

n/a / Mike Stern, NY Standard Realty

The multi-family building sold for $4 million.

584 West 152nd St

21-units, 17,960 sf

n/a / Mike Stern, NY Standard Realty

n/a / Mike Stern, NY Standard Realty

The multi-family building sold for $3.6 million.

5310-5312 Fourth Ave (Brooklyn)

4-story, 9,592 sf

n/a / n/a

5310 4th Avenue LLC

The mixed-use building sold for $3.6 million, or $373 per square foot.

330 East 22nd St (Brooklyn)

27-units, 19,200 sf

n/a / Mike Stern, NY Standard Realty

n/a / Andrew Sasson, Eastern Consolidated

The multi-family building sold for $3.2 million.

2475 Hughes Ave (Bronx)

4-story, 20-units, 15,000 sf

n/a / n/a

n/a / Victor Sozio, Scot Hirschfield, Jason M. Gold, Ariel Property Advisors

The multi-family building sold for $2.5 million.

68 Maujer St (Brooklyn)

8-units

n/a / Shaun Riney, James Saros, Michael Salvatico, Marcus & Millichap

n/a / n/a

The multi-family building sold for $2.5 million.

1310-1312 Flatbush Ave (Brooklyn)

9,100 sf

n/a / Derek Bestreich, Erik Rodriguez, Seth Schiffman, Marcus & Millichap

n/a / Derek Bestreich, Erik Rodriguez, Seth Schiffman, Marcus & Millichap

The mixed-use building sold for $2.3 million.

2330 Tiebout Ave (Bronx)

5-story, 20-units, 14,685 sf

Evanco Holdings LLC / Amit Doshi, Besen & Associates

2330 Tiebout Avenue Bronx LLC / Amit Doshi, Besen & Associates

The multi-family building sold for $1.9 million, or $131 per square foot.

1870 Grand Concourse (Bronx)

4-story, 8,600 sf

n/a / n/a

n/a / Scot Hirschfield, Jason M. Gold, Shimon Shkury, Victor Sozio, Ariel Property Advisors

The office building sold for $1.5 million.

502 Montgomery St (Brooklyn)

3-story, 5,746 sf, 7,128 buildable sf

n/a / Michael Amirkhanian, Cushman & Wakefield

n/a / Michael Amirkhanian, Cushman & Wakefield

The multi-family building sold for $1.5 million, or $217 per buildable square foot.

614 Marlborough Rd (Brooklyn)

4-story, 5,750 sf

n/a / Josh Goldflam, Highcap Group

n/a / Josh Goldflam, Highcap Group

The mixed-use building sold for $1.3 million, or $239 per square foot.

3030 Holland Ave (Bronx)

4-story, 13-units, 8,524 sf

n/a / Matthew Garcia, Besen & Associates

3030 Holland Ave Realty Corp. / Matthew Garcia, Besen & Associates

The multi-family building sold for $1.2 million, or $137 per square foot.

182 Malcolm X Blvd (Brooklyn)

2,500 sf

n/a / n/a

n/a / Eric Eckhardt, Aryaan Azarbarzin, Shaun Riney, Marcus & Millichap

The development site sold for $1.1 million.

994 Atlantic Ave (Brooklyn)

3-story, 3-units, 3,200 sf

n/a / n/a

n/a / Ofer Cohen, Melissa Warren, Dan Marks, Peter Matheos, Michael Hernandez, TerraCRG

The mixed-use building sold for $1.1 million.

956 Leggett Ave (Bronx)

4-story, 8-units

n/a / n/a

n/a / Jason M. Gold, Scot Hirschfield, Victor Sozio, Ariel Property Advisors

The multi-family building sold for $975,000.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

140 West St

32-story

Magnum Real Estate and CIM Group / n/a

iStar Financial and H/2 Capital / n/a

A $390 million loan was arranged to convert the upper 22 floors of the office building into residential.

333 Schermerhorn St (Brooklyn)

54-story, 519,000 sf

Steiner Studio NYC / n/a

Bank of America / n/a

A $300 million loan was arranged for the construction of a 54-story residential building.

212 Fifth Ave

24-story, 220,000 sf

Madison Equities, Building and Land Technology, Thor Equities / Dustin Stolly, JLL

iStar Financial / n/a

A $275 million construction loan was arranged for the office building.

250 West 43rd St

n/a

The Chetrit Group / Eastdil Secured

Athene Annuity and Life Company / n/a

A $129 million loan was arranged for the hotel.

119-125 West 25th St

12-story, 138,000 sf

Normandy Real Estate Partners / Dustin Stolly and Aaron Niedermayer JLL

Natixis / n/a

A $75 million loan was arranged for reconstruction of the office building.

428 Broadway

n/a

Chetrit Group / n/a

Jeffries LoanCore / n/a

A $70.5 million refinancing loan was arranged for the office and retail building.

216 East 45th St

17-story, 160,000 sf

Bernstein Real Estate / Allan Lieberman, Meridian Capital Group

n/a / n/a

A seven year, $51.5 million loan was arranged for the office building.

281 Park Ave South

6-story, 32,000 sf

RFR Holding LLC / Scott Aiese, Cushman & Wakefield

n/a / n/a

A $40 million loan was arranged for the church.

201 West 21st St

130-unit co-op

201 West 21st Tenants Corp. / n/a

NCB / n/a

A $7 million first mortgage and a $1 million line of credit were arranged for the cooperative.

34-15 74th St, 34-10 75th St (Queens)

160-unit co-op

34-15 Properties, Ltd. / n/a

NCB / n/a

A $4.2 million first mortgage and a $1 million line of credit were arranged for the cooperative.

350 Richmond Terrace (Staten Island)

140-unit co-op

Skyline Terrace Cooperative, Inc. / n/a

NCB / n/a

A $3 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

311 East 75th St

62-unit co-op

311 East 75th Street Owners Corp. / n/a

NCB / n/a

A $2.1 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

108 March 2015 www.TheRealDeal.com

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THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM THE SPONSOR. FILE NO. CD13-0265. 303 DEVELOPMENT PARTNERS, LLC C/O CB DEVELOPERS, LLC, 161 CHRYSTIE STREET, 2ND FLOOR, NY NY 10002. EQUAL HOUSING OPPORTUNITY.

Finances continued Address

Size

Borrower / Representative

Lender / Representative

Notes

2187 Holland Ave (Bronx)

72-unit co-op

2187 Holland Avenue Apartment Corp. / n/a

NCB / n/a

A $250,000 second mortgage was arranged for the cooperative.

50 Avenue A

17-unit co-op

Hearth House Owners Corp. / n/a

NCB / n/a

A $1.8 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

7 Great Jones St

7-unit co-op

7 Great Jones Corporation / n/a

NCB / n/a

A $1.9 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

310 West 79th St

32-unit co-op

310 West 79th Apartments Corp. / n/a

NCB / n/a

A $1.4 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

571 Hudson St

15-unit co-op

571 Hudson Street Apartment Corp. / n/a

NCB / n/a

A $1.2 million first mortgage and a $500,000 line of credit were arranged for the cooperative.

302 Convent Ave

42-unit co-op

302 Convent Avenue HDFC / n/a

NCB / n/a

A $1.5 million first mortgage was arranged for the cooperative.

2711 Henry Hudson Pkwy (Bronx)

50-unit co-op

2711 Henry Hudson Corp. / n/a

NCB / n/a

A $1.4 million second mortgage was arranged for the cooperative.

42 West 13th St

39-unit co-op

4213 Village Corp. / n/a

NCB / n/a

A $1 million first mortgage and a $250,000 line of credit were arranged for the cooperative.

989 Amsterdam Ave

8-unit co-op

989 Amsterdam Avenue HDFC / n/a

NCB / n/a

A $500,000 first mortgage and a $300,000 line of credit were arranged for the cooperative.

438 West 49th St

19-unit co-op

438 West 49th Street Owners Corp / n/a

NCB / n/a

An $815,000 first mortgage and a $100,000 line of credit were arranged for the cooperative.

565 West 169th St

51-unit co-op

Woodrow Court Inc. / n/a

NCB / n/a

A $700,000 third mortgage was arranged for the cooperative.

227 Central Park West

21-unit co-op

227 Tenants Corp. / n/a

NCB / n/a

A $600,000 first mortgage was arranged for the cooperative.

1801 Ocean Ave (Brooklyn)

91-unit co-op

1801 Ocean Avenue Corp. / n/a

NCB / n/a

A $500,000 second mortgage was arranged for the cooperative.

541 Broadway, 112 Mercer St

8-unit co-op

NOH Realty Corp. / n/a

NCB / n/a

A $500,000 second mortgage was arranged for the cooperative.

141-143-145 Sullivan St

60-unit co-op

141-143-145 Owners Corp. / n/a

NCB / n/a

A $500,000 third mortgage was arranged for the cooperative.

2156 Cruger Ave (Bronx)

72-unit co-op

2156 Cruger Avenue Apartment Corp / n/a

NCB / n/a

A $250,000 second mortgage was arranged for the cooperative.

Other Deals Starwood sells nearly 50% stake in North America’s biggest Hilton Garden Inn

Gordon Lau picks up LES buildings for $50M

Barry Sternlicht’s Starwood Capital Group sold its remaining 49.9 percent stake in Central Park South’s Hilton Garden Inn to Morad Ghadamian, a Lenox Hill–based investor and carpet importer, The Real Deal has learned. The deal was struck just over a year after the 401-key hotel opened its doors, and values the property at $240 million. Starwood and Joseph Moinian’s the Moinian Group co-developed the 34-story, 142,300-square-foot hotel at 233-239 West 54th Street, between Broadway and Eighth Avenue. The Gene Kaufman–designed property opened in January 2014.

Moinian retains its minority interest of less than 25 percent, according to sources close to the deal, and an unidentified stakeholder continues to hold a small interest. At the time Starwood Capital Group of the deal last week, the owners secured a 10-year, fixed-rate CEO Barry Sternlicht loan of $200 million from Morgan Stanley, sources said. A JLL team led by Dustin Stolly and Kevin Davis represented Moinian in the deal. Moinian, Starwood, Stolly and Davis declined to comment. The hotel is the largest Hilton Garden Inn in North America, according to Hilton.

“For Starwood, this is less strategic [than the Baccarat sale], just a financial investment,” said Sean Hennessey, CEO of hospitality consulting firm Lodging Advisors. Morad Ghadamian, who controls the entity MG237 No. 2 LLC, declined to comment. (The deal was announced after the deadline for the Deal Sheet.)

Gordon Lau of Lau Management purchased four Lower East Side buildings for $50 million, according to property records filed with the city this month. Carlherman Realty Corp. sold two of the buildings at 116 Elizabeth Street and 132 Bowery for $25 million. The five- and three-story commercial properties are adjacent at the rear end of the buildings, with one entrance facing Elizabeth Street and the other on Bowery. Fuss and Lieberman Realty Corp. are the sellers of 145 and 149 Bowery, two adjacent five-story buildings located between Broome and Grand streets. The mixed-use buildings sold for another $25 million, records show. In Dec. 2013, the Department of Buildings approved plans for Lau to convert and enlarge a fivestory residential building at 169 Bowery, just one block from his newly acquired properties.

(The deal was announced after the deadline for the Deal Sheet.)

Acadia buys East 62nd St. commercial space for $51M

Kaplan takes 80,000 sf at SL Green’s 750 Third

Acadia Realty Trust picked up commercial space and a garage at the base of an Upper East Side rental tower owned by O’Connor Capital Partners for a total of $51 million. The property, constructed in 1967, has the addresses 200-206 East 62nd Street, 203 East 61st Street and 1033-1049 Third Avenue. Acadia, a White Plains– based real estate investment trust, bought the retail for $15 million, the garage for $22 million and office space for $14 million, records show. The commercial space occupies the bottom two floors of the tower. Retail tenants at the roughly 11,000-square-foot ground-floor space include French shoemaker Arche and women’s clothier Variazioni. Most of the retail is located along Third Avenue. O’Connor is planning to convert the 120-unit residential component to 1033-1049 Third Avenue condominiums by late 2015. (The deal was announced after the deadline for the Deal Sheet.)

Kaplan, the Florida-based test-prep giant, inked a deal to sublease office space at SL Green Realty’s Midtown East tower at 750 Third Avenue. Condé Nast has a lease for 80,000 on the full seventh and eighth floors at the 34-story building for the next seven years, though the publishing giant is relocating to 1 World Trade Center, Crain’s reported.

Kaplan plans to move in June from its current 750 Third Avenue office at 395 Hudson Street. The company is subleasing its 147,000-square-foot space there to WebMD, which was in late-stage talks for the office in December, as TRD reported. JLL’s Scott Panzer represented Kaplan in the deal. Asking rent at the space is $40 per square foot. (The deal was announced after the deadline for the Deal Sheet.)

110 March 2015 www.TheRealDeal.com

147 & 149 Bowery

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Property Markets Group and Madison Equities’ 10 Sullivan is 50 percent sold.

The 16-story luxury condominium, designed by Cary Tamarkin, features units ranging from a 982-square-foot one-bedroom for $2.55 million to a 8,360-square-foot, six-bedroom, sevenand-a-half bath triplex penthouse for $45 million. Amenities include a 24-hour concierge, fitness center, stroller and bicycle storage, tempered and filtered fresh air, a 10-space parking facility and 2,600 square feet of retail space on the ground floor. The project also includes 20 Sullivan: four 25-foot-wide, four-story townhouses. The 6,500-square-foot units have four bedrooms and a private garden and rooftop, starting at $20.8 million.

Corcoran Group is handling marketing and sales. Contact: www.10sullivan.com.

Turtle Bay The Sutton 959 First Avenue The 113-unit, 30-story condominium developed

by Toll Brothers City Living, designed by architect Goldstein Hill & West, with interiors by Incorporated NY, launched sales on Jan. 31. The residences range from studios to four-bedrooms, with prices ranging from $850,000 to more than $6 million, according to StreetEasy.

The ground floor will include 9,569 squarefeet of retail space. Amenities in the doorman building include a bicycle storage room and children’s playroom. Toll Brothers is handling marketing and sales in house.

Contact: thesuttonnyc.com.

Upper East Side Carnegie Park 200 East 94th Street Sales launched at the 31-story, 325-unit condominium tower, designed by Robert A.M. Stern Architects and developed by the Related Companies. Residences include one-bedroom to three-bedroom homes. Units range in size from approximately 500 to 1,900 square-

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Twenty Exchange 20 Exchange Place A new batch of 221 apartments in the landmarked building is now available. Developed by DTH Capital, the 1931 Crown and Crown–designed building was converted from offices to 767 residential units, ranging from 500-square-foot studios to 1,800-square-foot three bedrooms. Monthly rents range from $2,295 to $6,200. The building retains its original rounded arch and carved granite entryway, historic bank vaults and many original art deco details. Amenities include a sun deck, fitness center and resident’s lounge with wet bar and game tables.

Town residential is handling the marketing.

Contact: twenty.exchange.com.

Greenpoint Eleven33 1133 Manhattan Avenue

Developed by the Domain Companies, Eleven33 was 40 percent leased as of early February. The 210-unit rental building, designed by Perkins Eastman with interiors

by Greenpoint-based architectural firm hOmE, features one- and two-bedroom apartments. The units range from 686 to 1,187 square feet and monthly rents start at $2,635 for a one-bedroom and range up to $5,400 for a two-bedroom, two-bath penthouse with a private terrace. Amenities include a 24-hour concierge service, onsite parking garage, pet spa, resident lounge, cyber cafe with workspace, fitness center, landscaped rooftop and courtyard with outdoor kitchen. Marketing is being handled by the Domain Companies.

Contact: 1133manhattan.com.

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(Broker: Caroline Bass, CitiHabitats, representing both parties.)

“Apartment 3C was a fantastic find for the buyer who could see beyond cluttered living areas, dark drapes and a very territorial pooch. Selling a tenantoccupied apartment always comes with its own set of challenges, but in this case the tenants’ dog created the biggest obstacle.

Thankfully, his bark was worse than his bite, but many clients were scared to even enter the apartment due to the vicious sounds coming from inside. I dealt with this issue by bribing the pup with treats and stowing him on the balcony for a bit while potential buyers looked around. Luckily, a newly married couple who lived in the neighborhood recognized what a great deal this apartment was, and they weren’t scared off by the large barking dog. They wanted to be in Vinegar Hill and needed a twobedroom, and the fact there was a washer and dryer in the apartment sealed the deal.”

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www.FisherIslandPropertySales.com 114 March 2015 www.TheRealDeal.com

One-bedroom, one-bathroom, 900-squarefoot apartment in a co-op building. The renovated unit features an open kitchen with quartz countertops and stainless steel

appliances. The apartment, built in 1959 and converted to a co-op in 1981, also features double-paned windows with city views and a full-time doorman. Maintenance: $1,756 per month. Asking price: $699,000; four weeks on the market. (Broker: Maria Appel, Bellmarc.)

“The apartment showed beautifully, and my client told me, “This has my name on it!” We made the offer that same afternoon at their first open house. My buyer was thrilled to find a newly renovated apartment in Midtown East, close to Grand Central, with washer/dryer hookups. She only wanted to look at buildings that either had a washer/dryer or allowed one to be put in the apartment. We found it the second time out. The apartment was so perfect for my buyer that she paid all cash and over asking to finalize the deal.”

— Maria Appel, Bellmarc

Murray Hill $3.375 million 140 East 37th Street

Five-bedroom, four-and-a-half-bath, 5,342-square-foot, single-family townhouse.

The five-story prewar residence, built in 1901, features a 900-square-foot basement and is buildable up to 6,230 square feet above ground. Zoning also permits the site be used for live/work, medical facilities, government offices, or nonprofits. The first floor includes an eat-in-kitchen, garden and outdoor space, terrace and cedar closets on the fourth floor and master bedroom with a 270-squarefoot dressing area. Taxes: $39,264 per year.

Asking price: $4.25 million. 48 weeks on the market. (Brokers: Chris Halliburton and Brandon Himmel, Halstead Property for the buyer; George van der Ploeg, Douglas Elliman for the seller.)

“The buyer was a longtime client who liked the neighborhood and the ability to create a two-family. They had been looking for 12 months. I liked the architecture and neighborhood. We had to do a sit-down contract, which was signed five days from showing. A hard-money loan was eventually used for financing.

A permanent loan will be placed once the conversion to two-family has been completed. Closing was the most difficult part about the deal.”

— Chris Halliburton, Halstead

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Leasing ranking

from page 55

an earnings call last month, referring to overall Manhattan activity.

Still, while that sector is growing, many of the largest leases that the top brokerages handled involved more traditional tenants in the finance, insurance and legal worlds.

In addition to Credit Suisse, other traditional companies were responsible for gobbling up large chunks of Manhattan’s office space last year. For example, NGKF’s Neil Goldmacher led a group representing the hedge fund Taconic Capital Advisors, which

signed a 39,850-square-foot deal at 280 Park Avenue.

Durels recently told company investors that the building, which is owned jointly by SL Green and Vornado, has seen significant activity from financial services.

In addition, while landlordrep brokers (those who work for the property owners) are often more visible, tenant-rep brokers have the upper hand in the macho world of office leasing. And the tenants’ brokers are compensated accordingly, with much larger fees.

While brokers differed on exactly why tenant reps are paid more, most said that it’s simply harder to deal with the tenant. Unlike landlords, which understand all of the insand-outs of office leasing and have exclusive agreements with brokers, working for a tenant is a different beast. Not only do tenants often require hand-holding, they can easily switch brokers and change the scope of their requirements whenever they want.

“Tenant reps spend countless hours working on potential leads,

at times without an exclusive relationship. They bring the tenants to fill space and therefore should be paid appropriately for their efforts and services,” said Robert Kaplan, managing director of leasing at Hidrock Realty, a property owner.

And different firms obviously bring different specialties to the table. A close-up on two of the firms, Cushman and Savills Studley, drives that point home.

Savills Studley — which was formed last year when the Londonbased Savills, a public company,

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purchased long-established New York firm Studley — handled media, apparel and legal clients in its 10 biggest deals. The firm, which specializes in tenant-side deals, tapped top brass Mitchell Steir and Michael Colacino to represent the media powerhouse Time Inc. in a 669,142-square-foot deal at 225 Liberty Street in Lower Manhattan and to represent Time Warner in a short-term, 943,438-square-foot renewal at 60 Columbus Circle, so that the company could stay there before decamping to its new headquarters at the underconstruction Hudson Yards site.

Savills Studley also handled the roughly 97,000-square-foot renewal deal that Warner Brothers inked at 1325 Sixth Avenue, and a roughly 70,000-square-foot-deal talent firm William Morris Agency signed at 11 Madison Avenue.

In contrast, the bulk of Cushman’s top deals were in finance, with companies including Mitsubishi MUFG Union Bank, Carlyle Investment Management, Jane Street Capital and the Paris-based bank BNP Paribas.

But Cushman is in flux. Late last year, the company dropped $100 million on the purchase of the investment sales brokerage Massey Knakal Realty Services, which dominates small building sales in the outer boroughs. And last month, officials announced that Cushman itself is on the block and could fetch $2 billion.

Colliers International, which ranked No. 6 on TRD’s list with 2.8 million square feet, is also in the midst of a structural revamp. Its parent firm, the Canadian FirstService, is splitting Colliers off into a new public commercial brokerage, to be named Colliers International Group.

Further evidence of change in the industry, the global DTZ, which ranked No. 7 on the list with 2.3 million square feet, and Cassidy Turley merged late last year and are now owned by a joint venture headed by private equity firm TPG Capital.

As TRD has reported, the wave of commercial brokerage mergers has led to a slew of agent reshuffling in the industry.

And insiders expect to see more of that in 2015.

“There are now a bunch of companies newly formed or newly capitalized, and everyone is making the same bold statement: We are a global brand,” Michael T. Cohen, president of Colliers tri-state region, said.

“But,” Cohen added, “everyone is going after the same limited number of slots to be a top five global firm.” TRD

www.TheRealDeal.com March 2015 55

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Top leases from page 56 lease with a credit-worthy tenant makes the building more valuable “because you have the rental stream.” That income, of course, can also be leveraged to borrow cash, or simply help to sell the building.

But as in any bet, each side can take a hit if the market swings in an unpredicted direction.

“Who knows what the market is going to be in 15 years?

[Landlords] run the risk of carrying a lease at below-market rents during the latter period of the term,” Sughrue said.

Of course, the fate of a building and lease can depend on the location.

“Nobody anticipated the steep run up in values in Midtown South,” Cohen said.

of powerhouse with a broader mix of tech, media and finance tenants.

While Credit Suisse, a financial firm, had the biggest lease, the company actually shrank its footprint there.

That scaling back paved the way for other types of companies, like Sony and the website Yelp, to sign on.

The income factor

Financial firms diluted The 10 most valuable deals illustrate a broader market trend: Some key Manhattan office buildings that were once dominated by financial tenants have been diversifying.

Indeed, only two of the top 10 deals involved financial firms.

“We have grown accustomed to seeing the tech sector absorb space that the financial sector once did,” said Cohen.

Brookfield Place is the prime Downtown example. Until recently, the office building complex was known as the World Financial Center. But it rebranded as finance companies moved out and it looked to attract non-Wall Street tenants.

Both Hudson’s Bay, the parent company of Saks’ department store, and the publishing giant Time Inc. signed off on big deals there last year.

In Midtown South, 11 Madison has seen its own transformation from a one-time financial hub to a new type

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Credit Suisse’s starting rent is in the $70-per-square-foot range — far more then the $28 per square foot it had been paying in a lease inked in the mid-1990s. In fact, when Credit Suisse first came to the building in 1995, its initial lease was for 1.1 million square feet and was pegged at “only” $500 million by the New York Times. (The lease was inked by an affiliate of the bank and the firm later expanded in the building.)

GM Building at 767 Fifth Avenue

There’s no doubt that giant office leases impact the entire value of a building.

For example, in 2000, Vornado purchased the 480,000-square-foot 7 West 34th Street for $128 million.

Today, the building is likely worth three times that.

Much of the increase in value is, of course, due to the building’s stronger revenue stream.

In 2002, Vornado raked in about $12 million per year there, according to filings from the U.S. Securities and Exchange Commission.

Today that total has tripled to nearly $35 million, with about $28 million of that coming from the 456,000-squarefoot office lease signed by the online retail giant Amazon late last year. The Amazon lease ranked No. 8 on TRD’s list.

Big deals also drive leasing in surrounding buildings, because smaller firms want to be near their clients, said James Caseley, executive managing director of ABS Partners Real Estate.

“They will tend to cluster around a mothership,” Caseley said. TRD

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Garment District from page 70 up “significantly” and would continue to accelerate if a rezoning is greenlit.

Kaufmann also said that a rezoning would “legalize all these office uses that are taking place anyway,” noting that the zoning regulations aren’t strictly enforced.

According to the news site Capital New York, a spokesperson for the city’s Department of City Planning called the district’s zoning “obsolete,” and noted that it was “not serving the interests of tenants, manufacturers, the fashion industry or property owners.”

“We’re committed to working with all interested parties to explore solutions to this land use dilemma,” the City Planning spokesperson said. “Saying it’s complicated is an understatement and … a solution will take time and a willingness to compromise.” Pressed for further details, the agency would say only, “We will let the public know when we have something further to put on the table.”

The issue has been brewing for a while.

In the early 1930s, the Garment District boasted the largest concentration of clothing manufacturers in the world. But production began to move out of state after World War II and then, eventually, overseas. In 1950, the fashion industry represented 13.5 percent of the city’s employment.

In 2012, the most recent figures available, that figure was barely over 1 percent.

To stem the outflow of fashion-related manufacturing jobs, the city enacted a special zoning regulation in 1987 that compelled Garment District landlords to reserve half of their property space for manufacturing purposes. But sources said that it did little to achieve that goal largely because manufacturing continued to move overseas where production was cheaper.

“The district lost production after the zoning at the same rate as before the zoning regulation,” said Barbara Blair Randall, president of the Garment District Alliance, the area’s business improvement district, which has been lobbying the city on the zoning changes.

Left, the upscale Archer Hotel, home to celebrity chef David Burke’s Fabrick restaurant, is emblematic of the recent changes in the Garment District. Right, McSam Group, run by discount hotel magnate Sam Chang, acquired 338-340 West 39th Street for $22.5 million in January.

The building is the former home of Samanta Cortes’ Fashion Design Concepts, which closed in 2013 when the rent doubled.

From 1995 to 2012, fashion industry employment in the 10018 Zip Code that encompasses the Garment District fell by 44 percent, while non-fashion employment rose by 82 percent.

Many in the fashion industry are pushing back against the changes, including high-profile fashion designers Nanette Lepore and Anna Sui. “Right now, there’s a big trend toward ‘made in the U.S.A.’ after the factory fires in Bangladesh, so production is coming back,” said Cortes of Save the Garment Center.

“The clustering of manufacturing and designers makes collaboration more efficient. It’s crucial to have it all together.”

In 2013, after her rent doubled, Cortes shuttered her business, Fashion Design Concepts, which developed embroidered, embellished and beaded apparel samples and was located at 338 West 39th Street. The combination of the aftermath of the recession and the rent hike did her in.

“I couldn’t recover,” she said.

In January, Sam Chang’s McSam Hotel Group acquired that building for $22.5 million. TRD

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Eichner profile from page 36 Upon returning to New York around 2010, he made an unsuccessful bid to put up $40 million to take control of One Madison, which at that point had been taken over by creditors after the original developer, Ira Shapiro, defaulted on his loan.

While Eichner didn’t come away with the tower, he did glean the knowledge that there were still unused air rights on the block.

“I knew that there were some air rights that were available on 22nd and 23rd streets,” he said. “What I didn’t know was that there was a site that was potentially acquirable.”

According to sources with knowledge of the deal, The Related Companies, which along with Ziel Feldman’s HFZ Capital Group had taken over control of One Madison, inherited an air rights contract on the block that Shapiro initially intended to use to build another tower.

Related, however, was not interested in a second building, and terminated the contract.

With a potential location on 22nd Street opposite One Madison in mind, Eichner started putting together an assemblage in 2011. He didn’t, however, start by purchasing the site. Instead, his first move was to buy a block of some 65,000 square feet of air rights over a co-op building next door.

Around that time, sources said, Shapiro and Feldman were looking to acquire air rights to build their own tower, without Related.

Sensing other sharks in the water, Eichner said he made the move first to buy the co-op’s air rights, because it would plant his flag on that side of the block.

“I felt that the air rights were the key, also because once I had the air rights, I blocked anyone from doing anything,” he explained. “After that, who’s going there except me?”

The strategy did present a potential problem: “I bought their air rights with nowhere to go,” Eichner said. “[It was] ballsy,” said Newmark Grubb Knight Frank’s Geoffrey Newman, who had been hired by the co-op board to sell the air rights. Feldman did not respond to a request for comment about the strategy.

All told, Eichner assembled eight different sets of air rights, including bonuses from an off-site inclusionary housing project, and dumped them on a shallow development site that fronts 100 feet and reaches just half way through the block. The total price tag was more than $100 million.

His equity partners, Dune Real Estate Partners and the

Fortress Investment Group, have committed more than $80 million to the project, and Goldman Sachs is providing a $340 million construction loan.

“None of that is dumb money,” said Dolly Lenz, the broker who brought media mogul Rupert Murdoch to One Madison to buy his $47 million, four-floor penthouse. “In fact, I’d venture to say it’s some of the smartest money on the planet. That’s comforting to me and it’s comforting to buyers.”

Eichner’s Kohn Pedersen Fox-designed tower graduates wider as it grows taller, cantilevering over the co-op that sold the initial air rights, and stretching 777 feet in the air, more than 150 feet taller than One Madison.

“It’s very complicated, considering the size of site and the layout of building,” Newman added. “But it really works well, despite the limitations on the size of the site.”

One of the building’s amenities is a shared space for tenants on the 54th floor, dubbed the “Sky Club.”

The apartments on the market range from about $2.7 million for a one-bedroom to $19.9 million for a six-bedroom, four-bath unit. About 12 percent of the building’s 83 condos are in contract, according to StreetEasy. The penthouse, which is not yet on the market, will reportedly list at $42.5 million.

Aspirations and allegations Eichner’s other current project, at 1800 Park Avenue in Harlem, is an 80/20 affordable housing tower that will be built in two phases. The developer bought the property from Vornado Realty Trust, which had long-stalled plans to build an office tower on the site, for $66 million in October 2013.

Eichner needs to pour the building’s foundation by June in order to ensure he receives a 421a tax abatement.

He has a $200 million letter of credit from the Bank of China, which insures tax-exempt bond financing he’s receiving from the state in return for setting aside 20 percent of the units as affordable housing. Eichner said he is able to continue to secure financing despite his prior problems because banks expect him to complete his buildings, but don’t hold him at fault for troubles related to market turns.

The Harlem building will feature a long list of amenities, including a gym and spa, 24-hour doorman and indoor and outdoor communal spaces. Rents will range from $2,760 for an average one-bedroom to $4,315 for a two-bedroom.

“It’s pretty rare to have those kinds of amenities. They’re almost nonexistent in that rental market,” said broker Matthew Green of the Bohemia Realty Group, which specializes in upper Manhattan rentals.

Eichner is aiming high, though. Rents in the neighborhood’s mostly pre-war building stock, he said, typically top out around $2,000 for a one-bedroom and $3,000 for a two-bed unit.

The Park Avenue project came with some legal trouble, as well. The day after he closed on the property, the private-equity firm Cerberus Capital Management sued the developer, claiming he backed out of an agreement to accept a $65 million bridge loan for the property and was liable for a $1 million break-up fee.

After a year of motions, Cerberus, which declined to comment, discontinued the lawsuit.

The developer also faces legal problems at the Manhattan Club.

Last summer, the state attorney general accused Eichner of fraud at the time-share hotel at 200 West 56th Street.

The AG’s complaint stated that Continuum sells more shares than each room can accommodate on a yearly basis, making it “extremely difficult if not impossible” for owners to book rooms.

“The discrepancy between what Manhattan Club owners are getting, versus what they are paying for, is so extreme that a few owners have sold ownership interests back to the sponsor for only $1, just to escape the burden of paying the common charges,” the complaint read.

Eichner would not comment on the specifics of the charges, but said he expects to reach a settlement.

“We are cooperating fully with the attorney general’s office and we expect the matter is going to be resolved shortly,” he said.

As he sets off on this latest round of building in Manhattan, Eichner said he’s intimately involved with the day-to-day operations of his two developments.

“Chief cook and bottle washer,” he explained his roles.

The firm is staffed with some long-time stalwarts, including his wife of 30 years, Leslie Eichner, who is his chief marketing officer.

Another key player is Luk Sun Wong, the developer’s right-hand man as he built in the 1980s. When the market tanked, Eichner said, Luk Sun went off for about 20 years.

“When I saw that I was going to develop these projects,” Eichner said, “I called Luk Sun and I said, ‘So, are you ready for another run?’” TRD

Lobbyists from page 49 Forest City Ratner, Taconic Investment Partners and the Chetrit Group are also clients.

Law firms While lobbying is not their bread and butter, law firms with big real estate practices are required to register as lobbyists when dealing with government. And some firms even have specialized government affairs units that do actual lobbying.

Wilson Elser Moskowitz Edelman & Dicker Perhaps the most interesting fact about this firm, at least for real estate insiders, is that it’s the go-to firm for the Real Estate Board of New York when it outsources its lobbying activities in Albany. REBNY paid the law firm $310,000 in 2013 and the first half of 2014 to lobby on the budget and regulatory issues affecting real estate.

Other clients include the state Association of Realtors and Stellar Management.

122 March 2015 www.TheRealDeal.net

The firm’s government-affairs outfit, which is based in Albany, is run by founder Ken Shapiro, who served as legal counsel to the three Assembly speakers who preceded Silver.

“It was a triple win. The project was approved. The community has a school and the city helped create hundreds of jobs and affordable housing units,” Wallace said.

“Our approach is to convert the traditional communitydeveloper tennis match into a quilting bee.” TRD

Greenberg Traurig The firm’s government relations arm was founded by Ed Wallace, a former vice president at Boston Properties who previously served as Manhattan’s councilman-at-large and chief of staff to Borough President Carol Bellamy in the days of the Board of Estimate.

Wallace is now the co-chair of Greenberg’s New York City office, where Melinda Katz, former chair of the Council’s land use committee, worked before she was elected Queens borough president.

The company’s government practice represented New York University in its expansion bid as well as Extell on Riverside Center, negotiating with the local community for a 750-student school at the site.

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from page 44

“A lot of the [wealth management] business involves advising clients on investments, real estate and not just sitting in New York,” said Lindsey Stokes, an agent at Town Residential, who worked in finance before turning to real estate.

In addition to her contacts in the finance world, Stokes said she also networks with education consultants who help Chinese families get their children into American schools.

“Most Chinese investors in residential real estate, the No. 1 reason they’re investing is because they’re sending their kids to school here,” she said.

Yet while government restrictions are starting to ease in China, making a purchase in the U.S. is still not as easy as writing a check at the closing.

Individual Chinese citizens, for example, are still limited to $50,000 investments in other countries annually. To get around the limit, some enlist family members and acquaintances to wire $50,000 installments out of China on their behalf in order to make a purchase. Others get their money out of the country by purchasing property in Hong Kong, or even Australia, which are not subject to the restrictions. Individuals with property or business in Hong Kong are able to exchange money through bank accounts based outside of mainland China.

In fact, large companies based in China often have bank accounts in Hong Kong or in other locations that help expedite deals. For those that don’t, foreign investment is permissible, but requires approval and registration from the Chinese government.

The easiest Chinese investors to deal with in the U.S., of course, are subsidiaries of Chinese companies that have operations based here. HNA Group, the conglomerate that includes airlines and real estate, is one example. HNA just purchased a full-floor condo on the 86th floor of Extell Development’s One57 for $47.4 million.

Boots on the ground Chinese-American banks are, of course, big players when it comes to getting deals done with Chinese investors in New York. And it’s not just because they are financing deals. If the bank can’t finance a deal, it will often refer it to someone who can.

Wendy Cai-Lee — head of the eastern region of East West Bank, a Chinese-American lender that has seven branches in New York — said when it comes to real estate, the bank specializes in mid-sized construction loans and acquisition financing of less than roughly $50 million. If a transaction is not in the bank’s sweet spot, Cai-Lee often refers investors to other financial institutions.

The bank also refers investors to architects, general

Preet

contractors and attorneys. “We provide a lot of support for our clients beyond just financing,” she said. “For international buyers, it’s even more important.”

Not surprisingly, both commercial and residential brokers and investment firms cultivate relationships with Chinese bankers and wealth advisors.

For example, Corcoran Group CEO Pamela Liebman spent 11 days in China this past November, meeting with existing and potential clients, as well as bankers and lawyers.

Meanwhile, Cushman & Wakefield CEO Edward Forst recently spent two weeks there. And, Carlton’s Swill said he’s logged about 100,000 miles in the past year, making trips to Asia at least once a quarter to close current deals and to hunt down future opportunities.

And in December, Town’s Stokes attended the Luxury Properties Showcase in Shanghai, which brought together 5,000 invitation-only guests and vendors who paid to have booths. (Stokes shared a booth with Town agent Hannah Han.) “It’s about having a presence and showing you’re not just sitting in New York City,” Stokes said. “You’re there and faceto-face shows you’re very serious.”

For that same reason, many U.S. commercial brokerages, along with several development companies, already have permanent boots on the ground in Asia. Colliers International, for example, recently launched an 11-person team in Asia, based out of Shanghai.

So-called roadshows, or elaborate presentations and parties, are also popular among American development firms looking for Chinese investors. Both the Durst Organization and Related Companies have reportedly gone on roadshows in China. And part of Liebman’s trip this past fall was geared toward drumming up investor support for Corcoran Sunshine Marketing Group’s new developments.

“It is about building relationships,” the Corcoran chief told Crain’s.

Through whatever means, brokerages and investment firms are constantly publicizing their deals.

“They’re out there, talking to potential institutional investors in China and are marketing the hell out of them that way,” said Jay Neveloff, chair of the Manhattan-based real estate practice at the law firm Kramer Levin Naftalis & Frankel.

Neveloff said the same is true of Chinese companies that dispatch employees to New York to vet deals.

Fosun International, for example, tapped two key staffers in New York to lead its real estate investments in the U.S.: Longtime Fosun employee Bo Wei and Erik Horvat, a former director of World Trade Center redevelopment at the Port Authority of New York and New Jersey.

But as Chinese institutional investors increasingly allocate investment funds here, getting a meeting is no small feat for real estate players in search of Chinese money.

“They’ve been completely inundated by people that come to them,” said Joel Rothstein an attorney at the law firm Paul Hastings. “You have to know someone who knows somebody.”

Seizing the moment Lawyers, banks and brokers aren’t the only intermediaries in this high-stakes world.

With demand surging for leads on good deals, several young business ventures are also vying for a piece of the action.

Dai’s Kuafu Properties, for example, is raising money from Chinese investors and doing joint-venture deals with New York developers. This past November, Kuafu hired Jeffrey Dvorett, formerly of Extell, as the nascent firm’s head of development.

Already, Kuafu’s projects include Hudson Rise, a 320,000-square-foot mixed-use building on 11th Avenue in the 30s. Dai — who consulted on New York real estate projects on behalf of Chinese investors before starting up the firm in 2013 — said Kuafu would put up most of the $135 million in equity needed to complete the $400 million development. The firm is also putting $40 million into a 223,000-square-foot project at 86th Street and Lexington Avenue, which it’s developing with Ceruzzi Properties, a Connecticut-based development firm.

Meanwhile, the Hong Kong-based private equity firm Gaw Capital is accelerating its U.S. investments.

For Chinese investors, that translates into one more way to deploy their money here.

Since 2011, Gaw, through its subsidiary Downtown Properties, has managed a so-called “club investment” vehicle, which aggregates deals for investors, targeting real estate in the major U.S. cities. That “club” has $868 million assets under management, with 20 percent of its U.S. portfolio in New York at properties including 123 William Street, 218 18th Street and 285 Madison Avenue.

In 2013, Gaw also formed Gaw Capital Partners USA with the goal of raising $500 million to invest in U.S. real estate.

Another Chinese investment platform — Hong Kongbased IP Global — buys blocks of apartments and markets them to investors. In New York City, the firm has invested in 515 East 72nd Street, 75 Wall Street, 225 Rector Place and the Sheffield. Since 2005, IP Global has invested $1.6 billion of Chinese money, according to its website.

Dai said many investors are waiting for the “right moment” to invest. Now, he said, is that moment: “They have business plans to execute.” TRD

from page 53

For starters, Bharara took over the investigation after Gov. Andrew Cuomo disbanded the state panel known as the Moreland Commission, which the governor himself created to investigate corruption in Albany.

Last July, Bharara penned a threatening letter to Cuomo suggesting he might investigate the Cuomo administration for obstruction of justice and witness tampering after four Moreland Commission members issued statements defending Cuomo’s decision to shut down the panel. Soon after, Cuomo hired prominent defense attorney Elkan Abramowitz.

Bharara is also reportedly investigating the role Cuomo’s aides played in shutting down the commission.

Cuomo, the New York Times reported, attempted to block plans by the commission to subpoena the Real Estate 124 March 2015 www.TheRealDeal.net

Board of New York to investigate, among other things, the organization’s political donations, materials related to 421a and its communications with public officials.

Investigators also unearthed what the newspaper called “unusually direct memorandum” sent by Steven Spinola, REBNY’s outgoing president, asking members to donate to Assembly Democrats.

“I can tell you that in private meetings with the speaker, the Senate majority leader and the governor, our past efforts to maintain a personal and supportive relationship was critical in shaping the outcome’” of legislation, Spinola wrote. “Our future ability to adopt favorable legislation, stop terrible legislation or modify legislation to limit the pain to our industry is directly tied to our continued positive

relationship.”

Unlike the Moreland Commission, Bharara is presumably free of political pressures and likely to examine all of these relationships for potential improprieties.

And news stories have already surfaced reporting that Bharara is investigating State Senate Majority Leader Dean Skelos and whether his outside income has any ties to the real estate industry. Skelos’ office issued a statement dismissing such suggestions as “irresponsible.

Blair Horner, legislative director of the non-profit New York Public Interest Group, has been closely following Bharara’s actions, and predicted that the prosecutor is just getting started.

“We’re still in the early stages of this thing,” he said. TRD

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The Year of the Chinese Investor from page 41 Manhattan Plaza, including Scott Rechler’s RXR Realty.

Sources said Fosun offered a 10 percent deposit on the deal, a sum that “gets your attention,” according to Proskauer’s Sernau.

While investors are hungry for trophy properties, of7 Bryant Park fice buildings and residential development, luxe hotels are particularly desirable.

Gilda Perez-Alvarado, a senior vice president at JLL’s hotel group, said investors recognize that Chinese tourism is growing. “They’re betting on the fact that there will be Chinese demand from the hotels they’re acquiring,” she said.

And lenders are lending In the U.S, the ChineseAmerican East West Bank has $28.7 billion in assets under management and last year it issued a stunning $8.6 billion in commercial real estate loans, up a full 20 percent from 2013.

The bank’s East Coast region, which includes New York, represents 10 to 12 percent of the bank’s business.

“Everyone understands commercial real estate,” said Wendy Cai-Lee, the head of East West Bank’s eastern region. “It transcends the language and culture barrier.”

Chinese investment obviously isn’t limited to Manhattan and Brooklyn. It’s also growing in suburbs like Greenwich, Connecticut, parts of Long Island like Jericho and Great Neck, and in Jersey City, New Jersey, where developer China Overseas America is planning a 760unit condo tower. Douglas Elliman’s Jennifer Lo, who works on Long Island, said she’s been to open houses where “you can see about 20 people per open house and they’re all Asian faces.”

Chinese buyers have accounted for roughly 25 percent of all buyers for homes $3 million and up in Nassau County between January 2013 and mid-February, she said.

Still, the bulk of investors are more focused on New York City. For example, Lo said one of her Chinese clients, who owns a $4 million home in Great Neck, also paid $18 million for a commercial building at 70 Broad Street. “They want to diversify their investments overseas,” she said.

The feeling is mutual

China’s love affair with New York City real estate isn’t onesided. All of the major commercial brokerages in New York have offices in Asia, and many have stepped up their efforts in the past two or three years.

Meanwhile, Chinese companies are beefing up their operations in New York.

Since plunking down huge sums for New York properties, both Anbang and Fosun are staffing up in New York. At Fosun, Bo Wei and Erik Horvat are mapping out a U.S. investment strategy.

“They bought this building not to be a one-off,” said Horvat, of Fosun’s acquisition of 28 Liberty. “No one comes in to spend that kind of money to buy a single asset. … We will be building and expanding our pres2500 Halsey Street | Bronx, New York ence here as we build our in44,000 sf available vestment platform further.” dedicated parking spaces | Separate entrance And the list of Chinese NYC bus service | 6 subway line companies growing here Less than 1 mile to I-95 goes on.

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office, told TRD at the time.

Last year, the State Administration of Foreign Exchange, which manages China’s currency reserves, set up shop on Fifth Avenue with the goal of increasing investments in private equity and real estate in the U.S. The exchange reportedly has about a dozen local staffers hunting for New York investment opportunities.

And China Investment Corp., China’s $600 billion sovereign wealth fund, is rumored to be moving its North American headquarters to New York from Toronto, the Wall Street Journal reported.

Still, while institutional investors have boots on the ground in New York, almost everyone reports back to higher-ups in China.

Carlton’s Swill put it this way: “Everything filters up through the chairman.”

Swill, like others, said Chinese investors are operating with a sense of urgency to find deals, even as they are still learning about the local market and grasping key financial lingo, like capitalization rate, which measures a property’s value by calculating the ratio of net operating income to the asking or sale price. “[In general,] they’re willing to invest at any dollar amount if they can get a cap rate above five,” he said. “They don’t know what it means, but they know it’s the going rate.”

Colliers’ Tang said Chinese investors who shied away from condo projects a few years ago because they were considered risky now feel confident enough to invest both in a joint venture partnership and on their own. A big part of that, he said, is that prices are continuing to rise.

In Manhattan, he said Chinese investors are increasingly interested in buying land, even as prices have risen to nearrecord levels and the competition has grown fierce. In part, that’s because in China, land is government property, and “buying” property there in fact means long-term leases.

DEDONA REALTY GROUP

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126 March 2015 www.TheRealDeal.net

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Neveloff, who represents Forest City Ratner in its partnership with Greenland, noted that condo projects now can actually offer a “double-edged advantage.” Not only do condos allow Chinese investors to get a piece of U.S. real estate, but they can also turn around and market those condos to potential buyers in China who increasingly want investments here, too.

“It creates a huge market for potential sales,” he said. TRD

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1

The Urban Land Institute presents “Using the EB-5 Visa Program in Economic Revitalization,” a webinar on how to navigate the program, identify projects that are a good match for EB-5 funds and how to secure foreign investors. Instructors include Tom Rosenfeld, founder of CanAm Enterprises of New York, and Sam Rhoads, executive vice president of the PIDC. Online only, 1:30 p.m. to 3:30 p.m. Fees: $125 for ULI members, $165 for non-members. Information and registration: uli.org.

3

6

6

The New York School of Interior Design presents the opening of its spring 2015 gallery exhibition “Rescued, Restored, Reimagined: New York’s Landmark Interiors.” The exhibition marks the 50th anniversary of the city Landmarks Preservation law and will highlight public spaces designated interior landmarks. A curatorial panel features experts and preservation advocates including architect Hugh Hardy, interior designer Kitty Hawks, Kate Wood, president of Landmark West, and Judith Gura, design historian and NYSID faculty member.

6 p.m. to 8 p.m. New York School of Interior Design Gallery, 161 East 69th Street. Through April 24. Information and registration: www.nysid.edu.

6

The American Institute of Architects, New York Chapter, presents “Sculpting the Architectural Mind: Neuroscience and the Education of an Architect” in conjunction with the Pratt Institute School of Architecture and the Academy of Neuroscience for Architecture. The twoday conference is co-organized by Dan Bucsescu of Pratt, Michael Arbib of ANFA and Atelier of Digital Design founder Ralph S. Steenblik. 6 p.m. to 6:30 p.m. Continues March 7, from 9:30 a.m. to 6 p.m. Free and open to the public. Pratt Institute School of Architecture, 61 Saint James Place. Information and registration: cfa.aiany.org

8

The American Institute of Architects, NY Chapter’s “Around Manhattan Official NYC Architectural Boat Tour” resumes. The Classic Harbor Line 1920s-era yacht travels the Hudson, East and Harlem rivers. Architectural highlights include the post-industrial waterfront in its stages of reclamation, the Chrysler and Woolworth buildings, the new World Trade Center buildings, the Statue of Liberty and Ellis Island and “swing” bridges along the Harlem River. 1:45 p.m. to 4:30 p.m. Program repeats multiple times throughout the month.

Meet at Chelsea Piers (Pier 62), West 22nd Street and Hudson River.

Fees: $76. Information and registration: cfa.aiany.org.

10

The Skyscraper Museum hosts “Daniel Rose Book Talk: Making a Living, Making a Life.” Daniel Rose, chairman of Rose Associates, will discuss his book and careers as a teacher, lecturer and architect. 6:30 p.m. to 8 p.m. 39 Battery Place. Free, reservations required. Information and registration: www.skyscraper.org.

12

The Real Estate Board of New York hosts “The Secrets of Top Brokers and Industry Leaders.” Details to be announced.

5:30 to 7:30 p.m. REBNY Mendik Education Center, 570 Lexington Avenue. Fees: Free, open to REBNY members only. Information and registration: www.rebny.com.

130 March 2015 www.TheRealDeal.com

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17

Crain’s New York Business presents “Crain’s Real Estate Conference: Planning the New New York.” The keynote speaker will be Carl Weisbrod, chairman of the NYC Planning Commission, who will discuss the de Blasio administration’s newest zoning policies and planning initiatives. Crain’s Columnist Greg David will moderate. Panel discussions will focus on restaurant tenants and affordable housing. Panelists include Rohini Dey, owner of Vermilion Restaurants, Wylie Dufresne, chef and owner, Alder restaurant, Lisa Gomez, chief operating officer, L+M Development Partners and Seth Pinsky, executive vice president, RXR Realty. 8 a.m. to 12 p.m. New York Athletic Club, 180 Central Park South. Fees: $300 for all; $3,000 for table of 10.

Information and registration: www.crainsnewyork.com.

18

The Institute of Real Estate Management hosts the “Asset & Property Management Symposium.” Panel topics include office marketing, leasing and tenant demographics, natural disaster and risk management, technology and resilience in urban planning and development. The keynote speaker will be Jonathan Rose, president of Jonathan Rose Companies. Featured speakers include David Amsterdam, of SL Green, and Andrew Cooke of Hines. 8 a.m. to 4:30 p.m. New York Academy of Sciences, 7 World Trade Center, 250 Greenwich Street. Fees: $495 for asset & property managers; $995 for vendors & service providers. Information and registration: www.iremnyc.org.

19

The American Society of Interior Designers NY Chapter hosts the “Architectural Digest Home Design Show” in conjunction with Merchandise Mart Properties and Architectural Digest magazine. Keynote speaker is Margaret Russell, editor-in-chief of Architectural Digest. Ticket includes access to the exhibition hall, Design Industries Foundation Fighting AIDS “Dining By Design” exhibit, café and other special events. Through March 22.

Pier 92 and 94, 55th Street at 12th Avenue. Fees: $30 in advance; $40 on-site. Information and registration: www.asidnymetro.org.

23

The Building Owners and Managers Association of New York presents its annual “Cigar Night,” a networking event including dinner, DJ and a selection of cigars. At Rossini’s Restaurant, 108 East 38th Street. 5:30 p.m. to 10 p.m. Fees: $300, payments required in advance. Reservations and information: www.bomany.org.

25

The Council of New York Cooperatives & Condominiums presents “CNYC’s Proprietary Lease for the New Millennium.”

Attorney Marc Luxemburg, president of CNYC, will discuss the changes to version 2.14 of the Proprietary Lease and Shareholders Agreement. 7 p.m. Location TBA. Fees: Free for members; $60 in advance or $75 at the door for nonmembers. Full and partial scholarships available for attorneys who work with low- and moderate-income cooperatives and condominiums. Information and registration: www.cnyc.com.

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RE:CAP

A roundup of real estate-related happenings last month COMPILED BY ANN IMPERATORE

LUXE A recent “The Hunt” column in the NYT about a food-blogging couple searching for a 2-BR inspires Gothamist to post: “Brunch Hate Reads: The Tedium of Real Estate Narcissism.” A commenter writes, “Hate-following is the new black.”

Havana Dreams: How will the RE investment market change when New Yorkers can buy property in an embargo-lifted Cuba?

SITT HITS THE FAN Manhattan developer Eddie Sitt sues his two brothers, contending they “treat the coffers of the family’s Sitt Asset Management like personal piggy banks.”

14-room Lenox Hill townhome at 107 East 61st St. for sale via Sotheby’s had us at a dressing room WITH 15 CLOSETS!

On a recent “Open House NY,” an overeager Connecticut homeowner claims, “Greenwich is only 35 minutes from Midtown.” While the distance is indeed 35 miles, the drive takes almost an hour without traffic, and it’s 54 minutes by train.

New Yorker’s “Talk of the Town” piece aka “Mezuzahs of the Rich and Famous” about famed NYC architect Peter Pennoyer — an Episcopalian — and his line of artisanal mezuzahs for clients.

New condo project at 338 Berry St. in W’burg named, “Williamsberry.” No word if fruit-flavored, lickable wallpaper (à la “Willy Wonka’s Chocolate Factory”) will be an offered amenity.

Brilliant Elliman ad using John Updike quote for the marketing of its new development exclusive at 301 West 53rd St.

FAIL

WIN

CBS crime drama “Blue Bloods” does an episode highlighting a “poor door,” in which detectives look into the murder of a lower-income resident living in a luxury building.

Schvitz interruptus: Manhattanites still can’t get their soak on as Spa Castle 57’s saunas, baths and pools remain closed due to lack of permit.

Vimeo cult-hit web series, “High Maintenance” releases new episode, “Sufjan,” wherein two aging hipsters get priced out of W’burg and are forced to move to Ditmas Park, where they learn you can’t have it all when it comes to NY RE.

We are confused by real estate brokerage Equus Residential’s advertised Equus Academy. Are they training real estate agents to ride horses or sell apartments?

While we assume Suburban Jungle Realty Group has some great testimonials to share, the site is virtually unreadable due to its font size, color and style.

This tweet by Internet personality Julia Allison dissing NYC living. “I once though I had a sleep disorder but then I realized I just lived in New York.”

Elliman broker Susan Elizabeth Turner’s brilliantly titled and designed NYC living/ RE blog “SET in the City,” named after her initials and love of “SATC.”

… but gives props: “Susan Elizabeth Turner, ‘SET’ is a reallife Carrie Bradshaw, but she’s no sex columnist! She is the sexiest real estate sales person in NYC.”

City cracks down on briberyaccepting building inspectors, property managers and contractors, leading to dozens of arrests.

Speaking of samesies: Recently launched NY Luxury RE publication, Metropolitan Magazine — although still without a first issue — blatantly “borrows” look of Metropolitan Museum of Art’s logo.

Metropolitan Magazine

Metropolitan Museum of Art

LOW RENT 132 March 2015 www.TheRealDeal.com

Bob Mankoff, cartoon editor of the New Yorker, settles into new 1WTC offices and shares cartoons about the history of NYC’s skyscrapers on latest episode of “The Cartoon Lounge”

Town agent Will Sharon supplements his stunning Instagram (@willsharon1015) collection of building number pictures #numbersofnewyork, by launching blog “Numbers of New York,” which offers the history of their neighborhoods.

Study by aroma experts ScentAir concludes the perfect scent to sell a home is White Tea and Fig.

Natalia “The Saw Lady” Paruz, NYC subway musician, creates eerie tunes by playing the saw, on HBO’s “The Jinx,” a docu-series about Robert Durst, who dismembered a neighbor with a bow saw. Oh the irony!

Doppelgangers: sales coach Tom Ferry and CORE real estate agent Doug Heddings.

In his SOTC address, de Blasio pledges to create or preserve 200,000 affordable housing units, and said developers would be required to build affordable units in any project that involves rezoning. #TaleofTwoCities

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COMINGS & GOINGS Town joins forces with Miami-based Fortune

Movers and shakers

own Residential is heading south this winter, in a new partnership with Miami-based Fortune International Group, a brokerage and development firm that sold $4 billion worth of real estate last year and has more than 1,000 agents in Florida.

The two firms will share marketing, communications and social-media platforms. Each firm will have a satellite office within each other’s office, and agents are being encouraged to seek dual licensing in New York and Florida. “We have so many referrals, both coming in and going to Miami,” said Wendy Maitland, Town’s president of sales. “We didn’t want to dilute our New York–based focus or expertise. We wanted to strategically Edgardo Defortuna Wendy Maitland connect our business with our counterpart in the Miami market.”

Fortune, headed by Argentinian real estate developer Edgardo Defortuna, calls itself Miami’s top luxury brokerage and claims more than 35 percent of the city’s market share. Fortune executives said they hope to tap the New York market with their clients.

In 2014, Town said it closed 1,148 sales and 3,775 rental transactions totaling $2 billion in business, combined. Town’s rental portfolio includes 3,500 units, making it among the city’s top leasing firms, and the company has $3 billion in existing and upcoming new development projects. One upcoming project is 212 Fifth Avenue, a residential conversion, which was recently acquired for $260 million.

CEO Andrew Heiberger said Town’s Florida expansion would be “the first of many.” What market Town taps next is unclear, though sources speculated that Los Angeles may be forthcoming. Town also announced plans to expand into London, but those stalled when the broker who was tapped to head the office there jumped ship. By E.B. Solomont

Eileen Spinola, the wife of Steven Spinola, the outgoing president of the Real Estate Board of New York, is also leaving the organization. Spinola was responsible for REBNY’s education programs, played a role in the growth of its residential division, and organized many of the group’s Eileen Spinola social events.

Real estate investment veteran Anthony McElroy joined Herald Square Properties as a partner, and will oversee acquisition of commercial properties for the group. Before joining Herald Square Properties, he was senior managing director for what is now DTZ, in charge of acquisitions and dispositions for its New York Investment Fund.

Gabriele Sewtz, who Anthony McElroy ranked as Elliman’s No. 3 Brooklyn broker in 2013, has moved to Compass, and will spearhead the opening of the firm’s Brooklyn office.

Heather McDonough and Henry Hershkowitz joined CORE as a new sales Gabriele Sewtz agent team. They were previously at Douglas Elliman, where they were ranked among the top-10 agent teams at the firm.

Citi Habitats hired Christopher Young as director of advertising and marketing. He will be responsible for marketing campaigns, social media outreach and event planning.

Young formerly oversaw marketing and advertising at Stribling and Associates.

John Cahill joined Christopher Young Cresa to lead the firm’s new life sciences practice at the New York office, and will seek to expand the firm’s pharmaceutical, medical and biotechnology client base. Cahill was previously at Colliers International, where he was responsible for John Cahill office and laboratory leasing.

Colliers International tapped Kimberly Brennan as chief operating officer. A veteran broker with 21 years of industry experience, Brennan will oversee business operations for the firm’s tri-state offices. She was previously at Cushman & Wakefield.

JLL hired Joseph Messina to be Kimberly Brennan executive managing director of its New York consulting/advisory group. He formerly served as executive managing director at Studley.

T

City Connections aims to be an EB-5 center

I

n a bid to establish itself as a conduit for small New York developers wanting to tap into foreign capital, David Schlamm’s City Connections Realty has applied to become a regional center for the wildly popular EB-5 visa program.

The regional center designation is given to sponsors of the EB-5 program, which awards a visa to foreigners who invest $500,000 in the U.S. economy. The program has become a go-to source for real estate capital in recent years, but while major developers have used the program, it has remained elusive for smaller players.

“We’re not going to be looking after the big, big deals,” Schlamm told The Real Deal.

Rather, he’s looking for “smaller deals for people who are building assisted living, maybe affordable housing.”

Schlamm’s partner, broker Min Chan, an immigration lawyer who joined his firm David Schlamm last year, brought the idea of becoming a regional center to him. She described the EB-5 program as “a good alternative financing vehicle for [small developers].” (See related story, page 40.)

Major New York developers have made headlines in recent years for raising capital via the EB-5 program for massive development projects. Related Companies raised about $600 million to finance part of the Hudson Yards project, while Forest City Ratner raised more than $475 million for projects near the Barclays Center.

Developers looking to tap foreign capital must go through a regional center, or become one themselves.

Opening an EB-5 regional center can cost around $200,000, and Schlamm and Chan are equal partners in the venture. Chan said regional centers typically collect $50,000 to $60,000 per investor to manage their investment and help identify projects. By E.B. Solomont

Buckworth picked to market 520 Park

Z

eckendorf Development tapped Brown Harris Stevens’s Louis Buckworth to market its ultra-luxury tower at 520 Park Avenue, a 54-story Robert A.M. Stern–designed development between East 60th and East 61st streets with one of the city’s priciest listings, a triplex penthouse that the Zeckendorf brothers hope will fetch $130 million.

Sales at the 31-unit building, which the Zeckendorfs are developing along with Eyal Ofer’s Global Holdings and Rafael and Ezra Nasser’s Park Sixty, are set to launch this spring. In addition to the $130 million penthouse, 520 Park will offer seven duplexes, each starting at $67 million. Single-floor units will start at $16.2 million. The building has a total sellout of $1.2 billion, according to a summary of the offering plan filed with the state Attorney General’s office.

Buckworth joined Brown Harris Stevens in December Louis Buckworth, 520 Park Ave rendering, and Arthur Zeckendorf after a successful run at the Corcoran Group. As part of the Pashby-Buckworth team with Maria Pashby, he sold $1.5 billion in real estate. Last year, the team brokered the $50 million sale of 19 East 70th Street to private equity titan Leon Black. The team represented the seller, One Hyde Park developer Christian Candy, who paid $35 million for the mansion in 2013.

“Louis has a unique understanding of high-end real estate in Manhattan,” Arthur Zeckendorf said in a statement. “His expertise in the marketing of luxury developments makes him ideally suited to the position.”

By E.B. Solomont

134 March 2015 www.TheRealDeal.com

Also on the move

Stephen Earle, the former Ralph Lauren senior vice president of home design, joined Related Companies as senior vice president and creative director ... Brad Hamel was appointed by Alliance Residential Company as senior Brad Hamel vice president of operations for the northeast and southeast ... Angel Johnson joined Brown Harris Stevens as a residential agent ... Jon Ziefert joined Stroock & Stroock & Lavan’s real estate practice group as special counsel in Stephen Earle the firm’s New York office.

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One block above Billionaire’s Row WE HEARD

Some high-end buyers have eyes only for the debut of 220 Central Park South

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▼

ne57’s glassy façade and 432 Park’s dizzying height aren’t Siren songs for everyone.

A group of wealthy buyers is sailing on by the luxury condos of the moment and waiting for the next addition to hit the neighborhood just north of Billionaire’s Row: 220 Central Park South.

The Vornado condominium, designed by Robert A.M. Stern, also has some owners of luxe condos nearby planning to trade up when 220 Central Park South launches sales, brokers told The Real Deal. Not surprisingly, the building is fast becoming a formidable competitor for the slew of super luxe condo developments in Midtown, not only Extell Development’s One57 and Macklowe Properties’ 432 Park, but also for another Extell tower at 225 West 57th Street, JDS’ development “skinny tower” at 111 West 57th Street, the Chetrit Group’s conversion of 550 Madison Avenue and others.

“We’re all looking for the next big shiny object,” said Jason Haber, a broker at Warburg Realty. “It’s not a glass curtain wall,” he added, referencing 220 Central Park South. “It’s a different kind of product.”

For some high-end condo buyers, 432 Park, left, and One57, right, are losing luster and Vornado’s 220 Central Park South, center, is taking center stage.

Vornado’s offering plan, which includes 95 units, was submitted to the Attorney General’s office in June and hasn’t yet been approved. With sales expected to launch by the summer, there are rumors that prices will start around $10 million and exceed $100 million.

“The renderings and the teaser — what they’ve shown so far — looks good,” said Michelle Bourgeouis, an agent at Town Residential.

“It’s kind of the complete opposite of what One57 is,” she added. “So many buildings that have been going up around the park have mostly had a very modern aesthetic.”

Douglas Elliman broker Toni Haber, who is Jason Haber’s aunt, said one of her clients, who purchased a condo at One57, plans to sell that unit and move to 220 Central Park South when the building debuts. “They’re definitely keeping an eye on that building,” she said.

She added buyers know that the building is one of the last assemblages on Central Park South.

“You can’t have anything built in front of you,” Toni Haber said. “Even though the building is going to be 370 feet shorter than 432 Park, you’re right on the park. 432 Park is not, even though you see it from anywhere you are.” By E.B. Solomont

Don’t mess with the Mouse

Savills Studley team wins approval of higher power, the Walt Disney Company, to seal a complicated deal Savills Studley’s David Carlos, far left, and Ira Schuman, had to contend with Disney to get a complex deal done for an Upper West Side congregation.

B

y the grace of God and Mickey Mouse, Savills Studley’s David Carlos and Ira Schuman managed to help craft a deal that will give an Upper West Side Jewish congregation a new home.

But the complicated transaction involved convincing a higher power, the Walt Disney Company, to go along with their budget-constrained plan.

“Money usually solves most problems, but we didn’t have any,” the two brokers said in describing the deal, which was nominated for a Real Estate Board of New York’s 2014 “Most Ingenious Deal of the Year” award, the winners of which will be announced this month.

The congregation — which runs a popular nursery school out of its decades-old 44 West 66th Street location — needed a new roughly 25,000-square-foot home. But it also required temporary digs to operate from for five years while its new site was under construction.

For at least 15 years, the synagogue was searching for a newer and larger space. But when a 2007 land-swap deal with Disney, which owns most of the rest of the block, fell apart, Mickey was miffed.

Carlos managed to smooth things over with Disney during a 2012 trip to California. By late 2013, he and Schuman decided that the best option for the congregation

was to get a developer to build it a new home that would span both its land and Disney’s.

But Disney made it clear it wasn’t going to hitch its fortunes to the congregation’s plan.

“We wanted to sell our site to the most cooperative developer, yet highest bidder,” the brokers wrote. “Disney only cared about price.”

They contacted 800 developers and received 29 offers. Ultimately, the congregation and Disney both chose the joint venture of Megalith Capital Management and Gary Barnett’s Extell Development, who agreed to build a new synagogue — along with a luxury development.

Next up was finding a temporary home for the congregation. But, alas, the site they had selected was leased to another tenant. An agreement was finally hammered out, but the delay pushed the build-out deadline back.

As the deal was unfolding, Habonim’s Rabbi, Joshua Katzan, asked Schuman if there was anything he could do.

“Pray for low interest rates”, Schuman replied.

The next day, the Fed extended its policy of Quantitative Easing,” the brokers wrote. “Divine intervention indeed.”

By Rich Bockmann

Hollywood attorney says ‘Hello’ to the Hamptons

Mark Geragos, long a real estate “dabbler,” buys the Capri Hotel

M

ark Geragos fell in love with the Capri Hotel in Southampton during a getaway last summer.

“I thought ‘Wow, this has the makings of something that could be really special,’” the Los Angeles-based celebrity attorney said. “It looked to me like it just needed some cosmetic improvements, and maybe a new operator in the restaurant, to liven it up a little bit.”

The fact that Geragos knew several of his clients had stayed there made the 29-room beachfront resort even more appealing. The trial lawyer, a principal at Geragos & Geragos, has represented Chris Brown, Winona Ryder, Sean “Diddy” Combs, Nicole Richie and Mike Tyson, among others.

While Geragos wouldn’t reveal which of his clients

136 March 2015 www.TheRealDeal.com

have frequented the Capri, it’s a famed celebrity hotspot for such famous faces as Howard Stern, Robert De Niro and Matt Lauer.

Geragos bought the hotel in February for $4.7 million from a trio of investors, and said he couldn’t be happier. He plans to renovate and is in talks with several restaurant operators.

He hasn’t made his choice yet, but said, “It’ll be someone you know.” Nobu and BLT Steak previously occupied the restaurant space. Renovation plans are also pending.

Geragos has dabbled in the real estate game for 30 years,

Celebrity attorney Mark Geragos, left, paid $4.7 million for Hamptons hotspot the Capri Hotel, where some of his clients have stayed.

and also recently plunked down $9.5 million for property in the Flatiron district, where he is planning a larger residential development. By Tess Hofmann

THE CLOSING

WITH DAN DOCTOROFF

It’s not a stretch to call Dan Doctoroff a modern-day Robert Moses. Doctoroff — who started his career at Lehman Brothers and later was a managing partner at private equity firm Oak Hill Capital Partners — joined Mayor Michael Bloomberg’s administration in 2001. As deputy mayor for economic development, he spearheaded the rezoning of large swaths of the city. The results can be seen in today’s buzzing development climate. In 2007, he left City Hall to head up Bloomberg LP, acting as a steward for his longtime boss who founded the media behemoth. Doctoroff, who announced his resignation from Bloomberg in September, is now weighing his next move. While focused on raising money to fight ALS, which claimed his father’s life, he still has a foot in real estate. In November, he called for a new convention center at Queens’ Sunnyside Yards. He’s also the chairman of Culture Shed, a performing arts center at Related Companies’ Hudson Yards, which is set to start construction in the late summer.

NAME: DANIEL LOUIS DOCTOROFF

BORN: JULY 11, 1958 HOMETOWN: DETROIT MARITAL STATUS: MARRIED CHILDREN: THREE Where were you born and raised?

I was born in Newark, N.J. My father was an FBI agent. I think he spied on Chinese communists and captured bank robbers. He left the FBI when I was two and we moved to Michigan. He became a lawyer and a judge. I grew up in the suburbs of Detroit.

138 March 2015 www.TheRealDeal.com

And your mom?

She taught school and later got a PhD in psychology.

Did she ever try to psychoanalyze you?

All the time.

Would you work for $1 again, like you did at City Hall?

For the right thing. I’ve been really fortunate. I’ve been in a position to make more money than I need. My wife and I give away a fair amount of it. Money will not drive what I do next.

What were you like as kid?

I probably was a classic older brother [to three younger brothers], a little bossy, very conscientious.

What are your weaknesses?

I have tons of them. At its core, it’s probably impatience.

I also love junk food. In the last year I’ve lost 20 pounds.

But I could eat hundreds of Tootsie Rolls at one time. It’s gross, but it’s true.

You graduated from Harvard, where you met your wife.

What was your career objective back then?

There never was a plan. If we had any expectations, it was that we’d have a nice, upper-middle-class life.

What’s been your toughest personal obstacle?

The most difficult thing I’ve had to deal with is the death of my parents. They both died young and from rare diseases.

How did you end up in New York?

My wife took a job here and I dutifully followed. I had been to New York three times. I thought it was dirty, too busy and noisy. I felt insignificant and I hated it.

How did you end up in business?

It was an accident. I had a summer job during law school.

Our law firm represented a company that was the subject of a hostile takeover. I saw the financial analysis that the investment bankers did, and I just thought it was a lot more interesting than what I was doing.

And you ended up at Lehman Brothers?

They took a chance. The person who interviewed me was Peter Solomon [a former deputy mayor under Ed Koch], who was probably the most important mentor in terms of guiding my career, probably him and Mike Bloomberg.

You’ve been a dogged proponent of having NYC host the Olympics, despite two failed bids. Why? The real benefit of hosting the Olympics is not the 17-day festival. Bidding for the Olympics, or actually hosting it, acts as a catalyst to get things done.

Do you still think about the stadium on the Far West Side that never got built?

Every time I look at the pathetic Javits Center I think about it, but that’s over. It’s history.

You just sold your townhouse for $11.25 million. Where do you live now?

We just moved to Central Park West. We lived in a brownstone for almost 20 years.

Do you worry about dying young because of that?

Not generically. My dad and my uncle died of ALS, Lou Gehrig’s disease, so there’s clearly a genetic component.

That creates a bit of a specter that comes and goes. [However] it’s not like I say, ‘I’ve got to get everything done now because I’m afraid I’m going to die tomorrow.’

What do you do in your spare time?

I’m a pretty avid cyclist. I founded the New York City Triathlon. I did it in 2008 and I thought I was going to die! I’ve [also] been struggling to get good at golf.

Who are your golf buddies?

The guy I play with most is [Related Chairman] Steve Ross.

We both belong to a place [in Southampton] called Sebonack [Golf Club]. I would not describe either of us as good.

In City Hall you took heat for your relationship with Ross.

There’s certainly no conflict today, and there never was.

We were very, very scrupulous in the way in which we dealt with each other.

Your wife is president of UJA-Federation of New York. Is Judaism a big part of your life?

We’re pretty observant, though I didn’t grow up that way.

I decided before we got married that I would have my bar mitzvah. Unbeknownst to me, my friends and brothers planned my bachelor party for the night before [the bar mitzvah]. There was a fair amount of drinking. [The next day], I’m standing on the bimah and the book I’m reading from starts to get farther and farther away. As the seconds go by, I’m thinking that this is the end of my marriage.

By E.B. Solomont PHOTOGRAPH FOR THE REAL DEAL BY ERINJuly PATRICE O’BRIEN www.TheRealDeal.com 2006 00

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