The Real Deal - July 2011 Issue by The Real Deal

TRD wins ﬁrst prize

Domino Sugar site’s sweet news

Real estate pros speak, unedited

NYC appraisers down for the count

105

Poolside at 15 CPW: The rich don’t swim

THEREALDEAL N EW YO R K R E A L E S T A T E N E W S

www.TheRealDeal.com

Vol. 9 No. 7 July 2011 $3.00

Untangling NYC’s hairiest deals Behind the scenes at some of the trickiest big-ticket sales of the last year

Steven Roth

Stephen Ross

Marc Holliday

Darcy Stacom

Norman Sturner

FACT The average Manhattan rent is just 1.2 percent below its 2007 peak, according to a recent report by Citi Habitats. See page 28.

AT A GLANCE Bubble trouble for trophy buildings?

BY CANDACE TAYLOR AND ADAM PINCUS With credit tight and lawsuits sprouting like weeds, no real estate transaction is simple these days. That said, certain deals have more “hair” on them than others. This month, The Real Deal took a behind-the-scenes look at how some of the most complicated deals in the city in the last year got done. Our reporting uncovered a number of previously undisclosed wrinkles in even

the most high-proﬁle deals, like Google’s $1.77 billion purchase of 111 Eighth Avenue, where the Internet giant’s top brass spent a tense two weeks reviewing the sale. Meanwhile, at 1 Park FEATURE STORY Avenue, Vornado had a tiny window of time to nail down a purchase, while fending off the advances of an opportunistic investor. And, during the battle over 3 Columbus Circle,

SL Green issued a cashier’s check for $258 million — believed to be the largest check of its kind — to help facilitate the deal. Of course, the residential market has its share of “hairy” transactions, too. The sale of the Sloane mansion, the priciest residential foreclosure in city history, involved a frenzied back-and-forth with a billionaire buyer prior to the actual auction. For more, read on. See stories beginning on page 39

Colliers’crusade NYC housing forecast: murky For Azure, blue Canadian cash fuels growth, Manhattan residential market stable — for now but ﬁrm still playing catch-up

skies ahead?

BY ADAM PIORE These are busy times for Mark Jaccom, Colliers International TriState’s CEO. After being bought by Canadian ﬁrm SPECIAL REPORT FirstService in ’08 and going on a hiring spree, Colliers is now competing “head-on” with bigger rivals, Jaccom says. Others say it still has a long way to go.

BY SARABETH SANDERS Five months after Azure’s initial sales launch, a 200-foot crane collapsed at the project, killing two workers. Today, the accident is a distant memory and sales are up, though the cond-op is working to overcome other obstacles.

See story on page 58

BY JAKE MOONEY AND CANDACE TAYLOR The NYC housing market is displaying a fragile stability, throwing off conﬂicting signals for buyers and sellers. New market reports show that Manhattan sale prices and activity have dropped from last year, but rose from last quarter. Despite these uncertain conditions, some newly conﬁdent sellers are getting greedy and demanding higher prices than the market can bear.

Aby ﬁres back

Casinos, gaming and horses, oh my! Real estate moguls have long invested in banking and sports. But lately, the investment area of choice has been horse racing and gaming. See page 56. Rendering of new Whitney Museum

UES development begins turnaround; hurdles remain

See stories on pages 14 and 32

Rosen defends himself, says feuds are being overplayed

For a year, insiders have worried about a possible commercial bubble, amid rapidly rebounding prices for prime buildings in NYC. Yet experts are still divided on whether the market is overly frothy. See page 16.

See story on page 46

Meet Brooklyn’s best A ﬁrst-ever ranking of the borough’s top agents

Jeff Blau: How I pestered Related for a job

BY DAVID JONES Developer Aby Rosen has been in the news even more than usual lately with much of the coverage centered on his personal feuds with business partners. But in an exclusive interview, Rosen ﬁred back, saying the disputes are strictly business-related. Still, some say that a string of problem projects and multiple wars with other investors raise questions.

BY CANDACE TAYLOR Brokers with the most Downturn notwithstanding, Brooklyn listings Brooklyn residential agents have Karen & Alan Heyman seen their business expand expo(Sotheby’s International): $59M nentially in the past decade. But even as large Manhattan brokerMordechai Werde & Michael Ettelson (Douglas Elliman): $43M ages have infiltrated the borough, there’s still little reliable data about Albert Wilk how much business Brooklyn firms (Wilk Real Estate): $35M actually do. This month, The Real Deal compiled a first-ever ranking of the kings and queens of residential brokerage in Kings County by listing volume. The top team is marketing nearly $60 million in properties, including Truman Capote’s former home.

See page 106.

See story on page 26

See story on page 52

Waiting for Whitney The new Whitney Museum, which broke ground in May, is more in touch with its real estate roots than other NYC museums, critic James Gardner says. But plans for the Renzo Piano-designed structure look more awkward than daring. See page 60.

A ‘title’ battle New York’s title insurance industry is suffering from diminished revenues, an unseemly reputation and new government rules. See page 36.

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Highlights J U LY

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At the desk of: Pam Liebman

Downtown’s double blow

In their words ...

The Corcoran CEO’s ofﬁce doubles as a putting green where rap music plays.

Lower Manhattan ofﬁce market ends string of positive news. The month’s funniest and most insightful comments from real estate pros.

Pam Liebman

Rosen ﬁres back 26 Aby Property mogul combats rumors

about personal spats with partners.

Aby Rosen

return to renovations 28 ALandlords resume ﬁxing up rentals.

32 Sellers get greedy Convinced of recovery, some sellers are trying to leapfrog comps. �� LEED for Schools��

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�� Metals in Construction ��

qualms 34 Qualifying Brokers share tips for discovering if

their clients have enough cash to close.

insurance’s battles 36 Title The industry, hurt by slump in home sales, struggles with foreclosure woes.

Untangling the knots

This month in real estate history

Azure sees signs of life

A behind-the-scenes look at NYC’s hairiest deals.

Illegal distillery sites in NYC shuttered.

A tragic crane collapse behind it, the UES cond-op begins turnaround.

Alan and Karen Heyman of Sotheby’s International Realty ��

6 July 2011 www.TheRealDeal.com

Azure

Private equity seeks bigger piece Equity ﬁrms and developers join forces in new ways to maximize return.

Appraisers down for the count

Brooklyn’s best

Insiders see permanent shift in size of profession and type of work it’s doing. A ﬁrst-ever ranking of the borough’s top residential brokers.

Casinos, gaming and horses, oh my! Real estate moguls look to win in a new ﬁeld.

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Highlights continued

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NYC crusade 58 Colliers’ Canadian money stokes growth at

the commercial brokerage.

for the Whitney 60 Waiting Critic James Gardner says new location for museum is great, but the building’s design is awkward.

Mark Jaccom, the company’s CEO

A comeback for ‘caravanning’ Brokers with listings in the same building or neighborhood are joining forces to market their inventory together, in a bid to increase exposure.

Core’s Vickey Barron at her 38 Bethune Street listing

West Side has upper hand 64 Upper H&H may be gone, but it’s not a sign of the times for the nabe. Family-size units and luxury rentals are doing best.

apartment buyers trickle into NYC 96 Chinese Restrictions on buying vacation residences at home is boosting trend. ��

ﬁnds new brokerage 96 Farkas Investor Andrew Farkas’s latest buy.

104

Another 100 percentcommission ﬁrm Ex-Rutenberg Realty agent launches Kian Realty, with a focus on rental brokers.

105

A league of their own Halstead, Corcoran and Elliman go head-to-head — in softball.

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

National Market Report

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

Calendar of Events Check out this month’s activities.

The Crossword

Corcoran Sunshine’s softball team

105 �� Metals in Construction ��

Residential Market Report

Reports from around the country on signiﬁcant developments and trends.

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How well do you know the New York City real estate market?

Cabana craze Sales of rooftop spaces on the rise as weather warms.

Closing: Jeff Blau 106 The How Related’s young-gun president got his foot in the door. Jeff Blau

100

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

104

Comings & Goings ��

8 July 2011 www.TheRealDeal.com

The stories behind the latest job moves and company announcements.

105

We Heard A lighter look at industry buzz.

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THE REAL DEAL N E W YO R K R E A L E S T A T E N E W S PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Candace Taylor WEB EDITOR Lauren Elkies ART DIRECTORS Ronald Gross, Derek Zahedi SENIOR REPORTER Adam Pincus WEB REPORTER Sarabeth Sanders WRITERS Catherine Curan, Melissa DehnckeMcGill, Ken Harney, C.J. Hughes, David Jones, Peter Kiefer, Adam Piore, Barbara Thau PRODUCTION MANAGER & RESEARCHER Linden Lim EDITORIAL ASSISTANTS Adam Fusfeld, Katherine Clarke

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Winning a gold star

find that the hardest thing about patting yourself on the back is being able to contort your arm to reach around behind you. In other words, self-congratulations doesn’t come naturally (or else I just need to start doing more exercise to get more flexible). But that’s not going to stop me from touting The Real Deal’s latest accomplishment — winning the first journalism contest we’ve ever entered. Last month, The Real Deal took home first prize as the nation’s top commercial real estate magazine and won the industry award for the best commercial real estate story of 2010. The prizes were part of the 61st Annual NAREE Journalism Awards bestowed by the National Association of Real Estate Editors. (NAREE is the only association of writers, editors, columnists and freelancers that covers residential and commercial real estate.) Esteemed publications such as the Wall Street Journal, the New York Times and the Los Angeles Times also competed. We were deemed the best commercial real estate publication on the strength of the three issues we submitted — for July, October and December 2010. Those issues featured cover stories like an exclusive interview with Park51 developer Sharif El-Gamal, a profile on activist investor Bill Ackman and his (ultimately unsuccessful) attempt to win ownership of Stuyvesant Town, a look at the challenges facing mega-brokerage Cushman & Wakefield, and a comprehensive story package on the most active distressed funds.

The Real Deal received ﬁrst prize as the nation’s top commercial real estate magazine.

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The fact that we were named best commercial real estate trade magazine in the country speaks to one of the common misperceptions about The Real Deal. People who don’t read us that closely (shame on you!) sometimes ask if we are just a residential real estate publication. (Of course, sometimes other people ask if we are only a commercial real estate publication. Adding to the confusion is that anything involving apartment buildings counts as “commercial” real estate in much of the rest of the country.) Those who read us regularly know that we cover both commercial and residential extensively — and always have. We’ve proven that you can clearly be both a residential and commercial publication, and that there is a lot of overlap between the sectors (even if commercial and residential brokers consider themselves as two distinct breeds). Take stories in two recent issues by our senior commercial real estate reporter, Adam Pincus — one on Harry Macklowe’s purchase of 737 Park Avenue (the largest condo conversion in the city since the bust) and the other on the retail space at 666 Fifth Avenue (the building that set a record for the priciest purchase in the city’s history). I challenge you to find a recent article in any another publication that contains more detail about what goes on behind the scenes in a commercial real estate deal in New York. Meanwhile, reporter Sarah Ryley was awarded best 2010 commercial real estate story by a trade magazine for “A Century of Booms and Busts,” an in-depth package that looked at the last 100 years of up and down cycles in New York City real estate. After months of research, Ryley compiled the first-ever chart of Manhattan residential and commercial prices over the past century. Her work followed in the footsteps of Yale University economist Robert Shiller — the man who called the housing bust and who compiled a similar chart, for U.S. prices, back in 2005. Previously, we’d all been too busy trying to break news and putting together the magazine to enter any major contests. But Deputy Managing Editor Candace Taylor took the initiative, so kudos goes to her. And we’re not resting on our laurels. We’ve been hard at work putting together this issue — which is chock-full of interesting (and perhaps future-award winning) stories. If you are lounging at the beach for a week or two, the magazine and some sunscreen should be all you need. Our cover package on the “hairiest deals” looks at some of the blind alleys and tricky paths brokers have recently encountered completing some of the city’s most prominent mega-transactions. Another story, on the Azure cond-op project, examines the site of a development that saw a fatal crane collapse in 2008, and what’s happened there since. Finally, we also look at the top residential brokers in Brooklyn — the first comprehensive ranking of its kind to be published. Enjoy the issue.

Stuart Elliott 12 July 2011 www.TheRealDeal.com

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Recovering in ‘ﬁts and starts’ Manhattan prices fall 5.5 percent in second quarter, but market still stable

BY CANDACE TAYLOR he Manhattan residential market remained relatively stable, if lackluster, in the second quarter of 2011, according to newly released market reports.

RESIDENTIAL MARKET R EPORT “We’re bumping along the bottom,” said Jonathan Miller, president of Miller Samuel Real Estate

Appraisers and the preparer of quarterly market reports for Prudential Douglas Elliman, the city’s largest brokerage ﬁrm. Manhattan’s median sales price in the second quarter was $850,000, 17 percent below the market peak of $1.25 million in 2008, according to the Elliman report. That’s an improvement from the depths of the downturn, when Manhattan prices were down 25 to 30 percent from the high. “We’ve recaptured some of that,” Miller said.

But prices have fallen from last year due to the impact of the ﬁrst-time homebuyer’s tax credit, which prompted “a wild spike” in home sales nationwide that halted after the program expired in April 2010, said Miller, who also does market reports in Las Vegas and Washington, D.C. The Manhattan median sale price dropped 5.5 percent in the second quarter from $899,000 in the same period last year. By contrast, the median was 8.7 percent

higher than the previous quarter — a result of the normal increase from slow winter sales in the ﬁrst quarter to the busy spring market, Miller said. Sales volume showed a similar pattern. Elliman’s report found 2,650 closed sales in the second quarter, down slightly from 2,756 in the same period last year but up 10.7 percent from the previous quarter. The market’s schizophrenia continues to befuddle brokers, sellers and buyers.

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“I can only surmise that the recovery we’re seeing is occurring in fits and starts,” said Sandy Edry, a senior vice president at Citi Habitats. For example, he said, “We’ll see large turnouts at open houses and three or four offers/contracts in one two-week period. And then it stops. Then you can have a lull of several weeks and just as you start getting worried that we’ve entered a slump, you see a significant spike in activity again. This has happened several times in the last few months.” One positive sign is that 10.5 percent of transactions in the second quarter sold at prices above their last listing price, Miller said. That’s the highest percentage since the third quarter of 2008, just before the Lehman Brothers collapse. That could indicate that Manhattan brokers have simply gotten better at pricing properties since the worst of the recession, when homes traded so rarely that market values were largely shrouded in mystery. Now, brokers generally have enough comps to accurately price properties. “Because of transparency in prices, the proof of what [a] place is worth is easier to show [sellers],” said Bill Kowalczuk, a senior vice president and associate broker at Town Residential. Of course, convincing homeowners to price appropriately is still difficult, and some sellers are getting overly ambitious when it comes to price (see story on page 32). In part because of this, many properties currently on the market are overpriced, Miller said. “There are people who are testing the waters who may have bought at peak and are trying to break even,” he said. These unrealistic sellers heighten buyers’ already strong belief that there are few suitable properties for sale. “It feels like there’s less inventory than there is,” Miller said. There were 8,070 properties for sale in the second quarter of 2011, down 1.1 percent from 8,157 in the same period last year, according to the Elliman report. “Last summer, I remember inventory being on the market that still needed to be absorbed,” said Holly Sose, a senior agent at City Connections Realty. “Now, my buyers are ready to move and there is not enough attractive supply.” That’s particularly true in some pockets of the market. For example, family-size apartments are in great demand, said Louise Phillips Forbes, an executive vice president of Halstead Property. Continued on page 88

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Bubble trouble?

“Our view is, how much further can you go up in price?” Hauspurg said. “Cap rates and interest rates can’t get any lower. This points to a bubble.” Real estate mogul Richard LeFrak, owner of the legendary

Experts debate what New York City’s increasing building sales prices really mean for market BY DAN WEIL or a year now, industry insiders have worried about the possibility of a bubble in the commercial real estate market, amid rapidly rising prices for trophy properties. A number of recent purchases, including Harry Macklowe’s $255 million pending acquisition of 737 Park Avenue, have raised eyebrows

for their high prices and low cap rates. And yet, experts still seem divided on whether or not the market is overly frothy. Some say investors anxious to deploy capital are driving up prices by overpaying for questionable assets. But others argue that, so far at least, still-tight lending guidelines and other restraining factors are preventing a repeat of the mid-2000s bubble.

“Doesn’t anyone [paying high prices for buildings] put twoplus-two together?”

Peter Hauspurg, chief executive of the Manhattan-based real estate investment services ﬁrm Eastern Consolidated, said his company is about to ink a deal for the sale of a Bryant Park development site for more than $400 per square foot — twice as much as much as the owners paid a year ago.

Dan Alpert, Westwood Capital LeFrak City apartment complex in Queens, also sees a bubble on the horizon for elite Manhattan

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ofﬁce buildings. When it comes to trophy properties, “there’s a wall of money chasing that stuff,” LeFrak told CNBC in May. But not even he knows for sure if Manhattan is risking a true bubble, or if the market is simply recovering. “We may be going back into a bubble,” he said, “or maybe the reality is that we have low interest rates, and this is what people will pay for these properties.”

Bubble on the horizon? Macklowe’s acquisition of 737 Park will be the most expensive residential building purchased for a condo conversion since the Apthorp in 2007. And several other recent deals indicate frothiness in the market. In May, for example, Manhattan-based real estate investment firm Zar Property reportedly purchased 1450 Broadway in Midtown for $204 million. That translates to $567 per square foot for the 43-story building. That’s some 42 percent higher than the price CB Richard Ellis paid for the property just two years ago. Also in May, Kuwaiti investment firm Fosterlane Management bought 750 Seventh Avenue for $485 million. That puts the price at $845 a square foot, with a quoted cap rate of 4 percent, according to research firm Real Capital Analytics. Experts say that’s close to the prices paid for similar properties at the height of the market in 2007. Low interest rates are fueling much of this activity, Hauspurg said, noting that buyers can still borrow at rates of 4.5 to 6 percent for office and retail property. The rebound of the commercial mortgage-backed securities market, which started in 2010 and has picked up steam this year, also has sparked sales. CMBS will likely account for 15 to 20 percent of commercial real estate transactions in the nation this year, compared to almost none during the recession, according to Dan Fasulo, managing director of Real Capital Analytics. “As soon as the CMBS market opened up again, everyone wanted prime assets,” said Dan Alpert, managing director of Westwood Capital, an investment bank based in Manhattan. Meanwhile, real estate investment fund managers are eager to deploy their capital — as they’ve been itching to do for a while now. “They were on the sidelines thinking prices would go down further, Continued on page 86

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The Bulletin Board

Domino Sugar project tells waterfront tale Compiled by Russell Steinberg

Hurdles cleared:

The $2 billion conversion of the former Domino Sugar factory cleared its final hurdle last month when a lawsuit claiming the developer failed to conduct proper environmental reviews was dismissed. The project will take an estimated 10 years to complete and create 1,000 permanent jobs. (Crain’s)

Sugary sweet:

Opening in the mid-19th century, the sugar refinery was, for a time, the largest in the world. At its height, it held over 4,000 workers and processed 3 million pounds of sugar

per day. The factory

was sold and closed in

2004, according to the New York Post.

On the waterfront:

The Domino project is just one of many plans for the city’s 520 miles of shoreline. On top of all the new condos on the Williamsburg waterfront, other Brooklyn projects include the 14-mile Brooklyn Waterfront Greenway. And last month, Mayor Bloomberg announced ferry service for several new Brooklyn locations.

Standing Tall: The Domino project will in-

clude four towers, two at 34

stories, and two at 30. While the taller towers were scaled back during planning, they’ll still be

skyline standouts. The tallest

two towers in the borough are

the Brooklyner and the Williamsburgh Savings Bank.

18 July 2011 www.TheRealDeal.com

Vital stats:

Out of the 2,200 planned residential units of both rentals and condos on the 11.2-acre site, 660 will be affordable. There will also be 274,000 sf of retail and community space and 99,000 sf of office space. Four acres of space will be open for public use along the waterfront.

Manufacturing’s demise:

The 2004 factory closing is part of a

decades-long trend. The state Depart-

ment of Labor reports that since 1950, NYC has lost over 80% of its manufac-

turing jobs. It lost 52% of them between 1969 and 1999, according to the Federal

Reserve Bank of New York — a sharper decrease than any other state.

A piece of history:

Preservation of the former factory, built in 1882, will cost $40 million. A new building will be built inside the shell of the existing building and the 40foot tall Domino Sugar sign that sits atop the refinery building will also be preserved. (New York Times)

Alternative visions:

Save Domino, a preservation group, had proposed turning the refinery into an arts institution, like London’s Tate Modern Museum, which was built in an old industrial power station. That plan called for 600,000 sf of gallery space and 200 affordable housing units.

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12788

20 July 2011 www.TheRealDeal.com

PHOTOGRAPH FOR THE REAL DEAL BY MAX DWORKIN

A model of the 1958 Corvette convertible Liebman wanted to buy, before her husband, Michael, a chiropractor, talked her out of it; he thought it would be unsafe. They live in Somerset County, N.J., with two daughters.

A wall panel opens to reveal a bar, equipped with an espresso machine and bottles of “whatever somebody sends me,” she says.

the

Desk

of:

The music is often on in Liebman’s office. Singer-song writer Gavin DeGraw and Coldplay rule from 9 to 5, she says, but expect hip-hop after that.

Plans for a new condo from the Rudins at the former St. Vincent’s site will be marketed by Corcoran Sunshine. The 300-unit Greenwich Village project includes a 200foot tower that has been criticized for being too tall for a historic district, but Liebman says, “that thing will sell like hotcakes.”

Color accents are important, especially with furniture. “I don’t like staid,” she says. “I like things that pop.”

A 2007 photo aboard the Intrepid Sea, Air & Space Museum on Manhattan’s West Side with then-president George W. Bush, where he gave a thank you to troops. Her politics? “I never discuss them.”

In 2002, at New Jersey’s Twin Brooks Country Club, Liebman sunk a hole-in-one on the 11th green. She hits the links twice a week.

The TV is always set to either CNBC or the Fox Business channel, whose reports about the sputtering economic recovery can hurt city home sales. “The overall psychology of the market is affected” by the negative news, she says.

Runs three miles a day. Also, at 7 a.m., Liebman can be found doing plyometric workouts (which use the resistance of one’s own body weight for strength training).

Fitness regimen

iPad. She can’t use it on the beach, but “I like the way newspapers look on it.”

Favorite gadget

Fred’s, at Barneys. It’s where Liebman spotted and introduced herself to then-Senate candidate Hillary Clinton in 1999. Clinton later spoke at a Corcoran sales meeting.

Favorite lunch place

WHAT YOU DON’T SEE:

A graduate of Curtis High School on Staten Island, Liebman was recently honored at a dinner with other New York public school alums, like grocery magnate John Catsimatidis, media exec Dick Parsons and Barnes & Noble’s Leonard Riggio.

ness has been pretty good lately, despite the economic uncertainty. While the $500,000 to $1.5 million Manhattan home market has softened since the early spring, Liebman points out that the highest-priced properties are flourishing. Plus, in May, Corcoran ranked tops in the city in terms of listings — 1,815 of them, at $3.5 billion. B y C. J. H ugHes

PAm LiebmAn

ig brokerages, says Pam Liebman, president of the Corcoran Group, are often stereotyped as being somewhat stiff. But, she says, that’s not a fair characterization. And, in her office at 660 Madison Avenue, where the music is usually on and Liebman can occasionally be found putting golf balls, she is bucking that image. That might be because busi-

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Downtown’s double blow Lower Manhattan ends string of positive news as BofA shrinks footprint and Nomura departs for Midtown BY ADAM PINCUS he giant, 900,000-square-foot relocation and expansion lease that Japanese financial firm Nomura Holdings America signed in Midtown late last month punctuated an improved second quarter in the Manhattan officeleasing market. That improvement came even as the national economy was battling high unemployment and slow growth, preliminary data from commercial services firm

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Cassidy Turley showed. “Midtown, Midtown South and Downtown all recorded positive absorption in the second quarter,” said Robert Sammons, vice president of research at Cassidy Turley, citing a key indicator of a tightening leasing market. That slight improvement bore out in the numbers: The availability rate — measuring vacant space and space that will be available in the next 12 months — for Manhattan fell by .6 points to 11.7 percent in the second quarter, and the average asking rent rose by $0.78 per square foot to $49.12 per foot, the preliminary figures from Cassidy Turley showed. Still, Marc Shapses, an executive managing director at commercial services firm Studley, said both tenants and landlords were being “extra conservative.” “People are more risk-averse. They are thinking and rethinking before making a decision,” he said. Technology firms seem to be among those who’ve done their thinking. They continued to lease up space in Manhattan last month, both in Midtown and Midtown South. Two new deals involved the popular web-based platform Major League Gaming, which attracts hundreds of thousands of fans to Internet competitions, and Interactive Partners, which develops sophisticated web applications. But Downtown, still the weakest Manhattan market, was hit with negative news on two fronts late last month, ending a string of positive developments. Indeed, the Downtown market is losing a big tenant in Nomura. And, Bank of America announced that it would keep just a fraction of floors in Brookfield Properties’ World Financial Center that it currently leases. But in a positive sign, CoStar Group categorized about 1.2 million square feet of space in two deals at Silverstein Properties’ under-construction 4 World Trade Center as “leased.” While the deals were agreed to in 2006 and the classification is largely a bureaucratic housekeeping

Manhattan ofﬁce stats Manhattan

Availability Average rate asking rent

Q2 ’11 Q1 ’11

11.7% $49.12 12.3% $48.34

Midtown

12.0% $56.10 12.4% $55.80

Q2 ’11 Q1 ’11 Midtown South

10.4% $40.48 11.5% $38.21

Q2 ’11 Q1 ’11 Downtown

12.0% $37.46 12.9% $37.73

Q2 ’11 Q1 ’11 Source: Cassidy Turley

change, it is nevertheless a significant milestone.

Midtown While Midtown South has been the go-to neighborhood for new technology leases — underscored by Google’s record-setting purchase last year of 111 Eighth Avenue in Chelsea (see article on page 39) — some Internet firms have made a home in Midtown. According to CoStar, Major League Gaming, which industry publication The Next Web said had half a million people streaming a live competition in Ohio last month, signed a deal to take 11,425 square feet on the 11th floor of Cohen Brothers Realty’s 3 Park Avenue, a 936,000-square-foot building between 33rd and 34th streets. Cushman & Wakefield brokers David Glassman, Bruce Mosler, Arthur Mirante and Joseph Cabrera represented the landlord, but declined to comment. The tenant was represented in its move from 420 Lexington Avenue by Roberta Panos and Guilherme Tepedino, CoStar showed. The deal may have helped to chip away at Midtown’s availability rate, which fell by .4 points in the second quarter to 12 percent, figures from Cassidy Turley showed. Asking rents for Midtown meanwhile, were up by $0.30 per foot over the last three months, to $56.10 per square foot. The Nomura deal at Worldwide Plaza at 825 Eighth Avenue represents an significant expansion over its space in the World Financial Center, but the exact figures were not available. But even as the overall market is tightening, some skeptics believe the situation is still weak for smaller parcels of space on the West Side — particularly between Continued on page 92

In their words...

The month’s funniest and most insightful comments from real estate pros

“The burger is God’s most perfect food. There is nothing better than a burger. Burgers are like sex. When they’re good, they’re great — and when they’re bad, they’re still pretty good.” Real estate mogul Andrew Farkas at a panel hosted by Daniel Boulud to celebrate the 10th anniversary of DB Bistro Moderne. (New York Post)

“That’s certainly one way to become an underwater homeowner.” Mordechai Kushner, a fan of The Real Deal on Facebook, talking about a Manhattan townhouse with an indoor pool.

“I grew up in a family where money was not discussed, so it’s always been an uncomfortable subject for me. And when my client is a man, I always feel that it’s almost like asking about the size of his penis.” Wendy Sarasohn, Corcoran Group. (See story on page 34.)

“In this climate, there’s the very rich, and then that’s it. There’s no in-between, for some reason.” Prudential Douglas Elliman agent Monique Ender Silberman, talking about the high-end market in connection with her townhouse listing at 51-53 East 73rd Street. The property is owned by her family. 24 July 2011 www.TheRealDeal.com

“There was an article a couple years ago in Sports Illustrated that said that 80 percent of players have no money five years after they retire. … They often invest in nightclubs, which go belly up. If they get into something like real estate, that’s solid over time.”

“A weather forecast of “96° feels like 115°” is like a broker saying a “small one-bedroom feels like an even smaller studio.” (A tweet from StreetEasy) “It’s not everyone who buys at the right time in the 1960s and sells nearly 45 years later.” Citi Habitats broker Ross Brown on handling the sale of a Boerum Hill brownstone that an 89-year-old owner stands to make a 11,744% profit on. (New York Post)

“Eataly is for the kind of people who’d rather spend $700 on a pair of shoes than $70.” Marcello Assante, the owner of Mambo Italiano on Mulberry Street, on how the Mario Batali-backed market is cutting into Little Italy’s business. (New York Post)

Walt Frazier III, Keller Williams broker and son of an NBA great.

“Take it easy on Anthony.” Chris Havens, founder of Creative Real Estate, speaking to an audience at the Brooklyn Real Estate Summit, on the day that Democrat Anthony Weiner resigned as a congressman last month.

“If we were to rebuild Lincoln Center, but even better, in Lower Manhattan, imagine what that could do.” Community Board 1’s Julie Menin on what the Frank Gehry-designed World Trade Center Performing Arts Center could mean for Lower Manhattan retail.

“The Emperor with No Clothes isn’t Weiner, it’s Bloomberg and Ratner.”

Daniel Goldstein, the anti-Atlantic Yards advocate, on Twitter.

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PROFILE

Aby fires back BY DAVID JONES ately it seems developer Aby Rosen’s every business relationship is worthy of its own daytime soap opera. While Rosen and his company RFR Holding have been in the news a lot since the downturn hit because of struggles at 610 Lexington Avenue, which is on the brink of foreclosure, and because of a split with hotelier Ian Schrager, in the last few months the headlines have been even more fast, furious — and personal — than normal. In May and June alone, multiple news outlets, including The Real Deal, have published accounts of Rosen’s business feuds. They include: turmoil with his long-time business partner and friend Michael Fuchs; a nasty lawsuit filed by investor Harry Lis involving the sale of one of their joint investments; and a salacious dispute Rosen had with billionaire partner Peter Brant, who is selling his stake in RFR’s Seagram’s Building. According to Crain’s, Brant is selling his stake partially because of “disparaging remarks” Rosen and Fuchs made about Brant’s wife, Stephanie Seymour, whom he’s divorcing. But now — after keeping mum for several weeks — Rosen is firing back, saying that while he may be involved in several simultaneous disputes, there’s nothing personal about them, and that some of them are starting to be resolved. In an exclusive interview with The Real Deal last month, Rosen said he’s had enough of the gossip and the rumors of his demise from people who don’t understand the business and know even less about him. “Everyone is trying to make it look like a drama, and it is very un-dramatic,” said Rosen at his 390 Park Avenue office. While Rosen acknowledges he got caught up in the go-go atmosphere of the boom, he said he’s taking too much of a public pounding. He said there are problems in his portfolio, but he characterized them as issues involving some of his partners keeping their end of the bargain when the going got tough and when investment returns were less than satisfactory. “If you are a capital or operating partner, you have to perform,” Rosen said. “If someone is an operating partner of mine, and he doesn’t perform as he should perform, I should have the right as a capital partner to ask him to step aside.”

26 July 2011 www.TheRealDeal.com

No bad blood The biggest of his most recent spats concerns Brant, who bought a stake in the landmark Seagram’s Building at 375 Park Avenue when RFR bought the property for $375 million in 2000.

Yet Rosen claims Brant’s decision to sell had nothing to do with any personal animus, or that it has anything to do with Brant’s divorce: “Peter Brant is one of the most knowledgeable and smartest investors I’ve ever met.” Despite the chronicles of their battles, Rosen insisted that Brant simply wants the capital from the sale to “shore

Rosen says he’s had enough of rumors of his demise and insists there’s nothing personal about disputes with partners

up his share in the paper business.” Rosen and Fuchs have been investors in Brant’s White Birch Paper Co., a Canada-based newsprint company that filed for bankruptcy protection in February 2010. Brant, who acquired paper mills almost as aggressively as Rosen bought real estate, was hit by a severe downturn in newspaper readership, which wreaked havoc on his once-lucrative business. Brant declined to comment on any specifics, but issued a statement saying: “A substantial offer was made for my share of the Seagram Building that provided for a great return on my investment. I chose to accept this offer and will employ the capital elsewhere. Aby Rosen and Michael Fuchs remain close family friends.” Meanwhile, Rosen is working to put out another fire with long-time investor Harry Lis. In court documents, Lis’ company, Lis and Gan Global Investments, claimed Rosen spent its $7 million share of proceeds from the sale of 451 Lexington Avenue on RFR’s other properties. Rosen told The Real Deal (as has been stated in court documents before) that RFR has always treated the portfolio as one entity, and reinvests profits directly in other properties. Rosen also sued Lis, alleging that Lis refused to participate in additional requests for capital calls. Aby Rosen (top): If an “We had asked operating partner doesn’t perform, “I should have the him, like most of our right as a capital partner partners, to particito ask him to step aside.” pate in capital calls. Peter Brant (above) is sellIn difficult times you ing his stake in the Seaneed to rely on your gram’s Building (left). partners to put in [their] share of the money,” Rosen said. Sources say, however, that Lis and Rosen settled part of the dispute early last month with Rosen paying the vast majority of what Lis said he was owed. Sources close to Lis insist he has more than met his obligations as an investment partner. “There has been no shortage of capital calls that he’s made,” said a source close to Lis. Court documents indicate that a hearing on the case is set for July 7.

But Lis has also filed a related judgment against Rosen for properties in Stamford, where he’s alleging that funds from his investments are also being used to help shore up RFR’ s struggling portfolio. In addition to the first Lis case, Rosen appears to have settled another of his more recent financial headaches — the $17 million foreclosure suit at the Chinatown Brassiere site at 380 Lafayette Street. Mission Capital Advisors put the property on the market in March. That was after special servicer LNR Partners filed suit to foreclose on the retail condo when RFR fell far behind on loan payments. But Rosen said that in recent weeks RFR has re-acquired the note, and is negotiating a deal to put a new restaurant in that location.

More than coincidence? Still, some say that Rosen’s back-to-back disputes seem to be more than just a coincidence. “There are enough of these disputes that it does raise questions about something going on,” said Ben Thypin, senior market analyst at real estate data firm Real Capital Analytics. What’s more, Rosen’s troubles are not limited to his commercial properties. Unit owners at 50 Gramercy Park North, a 23-unit luxury co-op next to the Gramercy Park Hotel, have filed a $3.1 million suit against Rosen, Fuchs and Schrager, alleging the developers failed to repair a number of construction defects and mechanical problems there. They say the developers have failed to meet with the unit owners and have yet to respond to the complaint. “We’re still waiting for a response from the defendant,” said Kent Karlsson, attorney for the unit owners. Meanwhile, sources say Rosen is quietly testing the market for a possible sale of 350 West Broadway, another high-profile residential project. Rosen acknowledged that some in the industry think he needs to slash prices in the building, where units are priced at $8.6 million and $26 million, according to StreetEasy. But he denied that the building is for sale. He confirmed that power couple Jared Kushner and Ivanka Trump recently toured the seven-unit building’s $26 million penthouse, but said that has nothing to do with any possible effort to market the building. Rosen’s recent struggles and entanglements haven’t stopped him from getting involved in new deals. In a move that surprised many in the industry, news broke last month that he bought the Paramount Hotel at 235 West 46th Street for $275 million. Whether the Paramount deal is a beacon of hope or a blip on a dark screen for Rosen’s vast business empire has yet to be determined. TRD

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Home improvement With stronger rental market, landlords invest in renovations again

BY JANE C. TIMM t the height of the recession, New Yorkers could rent deeply discounted apartments without paying brokers’ fees, but found that aging appliances and scuffed hallways were often the norm. Those days are over. Now, landlords are courting renters with granite countertops and new, stainless steel appliances — in exchange for higher rents, of course. With the market bouncing back and renter incentives disappearing, many landlords are ramping up renovations at their buildings, after several years of avoiding major capital projects. With rents rising, the economics of renovations make sense again. “We’re definitely doing more improvements, the market is definitely back, without a question,” said Leore Sabet, the owner of the Sabet Group, which manages thousands of residential apartments nationwide, including a number of buildings in New York City. Sabet said the firm’s New York properties are now achieving 10 to 20 percent higher rents, due in part to improvements like new appliances, marble bathrooms and refinished hardwood floors.

Start with the kitchen Two years ago, the rental market in Manhattan was suffering. To keep their buildings full, landlords routinely paid brokers’ fees, rather than having tenants paying them, and threw in one or more months of free rent. Now, New York City rents are recovering. According to Citi Habitats’ May market report, the average Manhattan rent was just 1.2 percent below the 2007 peak. As a result, renter incentives have virtually disappeared from the market. Out of 6,000 apartments in the Citi Habitats New York listing database, only about 10 percent — 603 apartments — offered incentives last month, according to Matthew Berkson, a senior associate broker at the firm. That percentage may be even lower in tighter markets like Chelsea or the West Village, he added. With more cash rolling in and landlords free from the burden of paying brokers’ fees, they are more likely to upgrade their properties. “When you don’t have that expense, you can really put [money] back into the buildings,” Sabet said. According to the New York City Department of Buildings, alteration permits in residential buildings rose 7 percent to 38,815 in 2010, after falling 4 percent in 2009. 28 July 2011 www.TheRealDeal.com

“Landlords are [clearly] more willing to invest in renovations,” said Danny Moyal, a senior vice president at Citi Habitats. Newly refurbished apartments com-

on the Upper West Side in brownstone apartments. The presence of brand-name appliances are not as important to renters as they are to buyers, brokers said, but granite countertops and stainless steel,

renovation of the stairwell in a brownstone at 28 West 75th Street.

Cashing in on the investment

There are other compelling reasons for rental landlords to renovate their buildings. For one, many apartments in new condo towers built during the mid-2000s boom are now available for rent. That means renovations and improvements are crucial for older rental buildings to compete. “A lot of the rental buildings needed to renovate to compete with those condos that didn’t sell,” said Gordon Golub, executive vice president and director of rentals at Citi Habitats. “The condo buildings have gorgeous finishes in the apartments and they have much grander lobbies or gyms or common areas.” Sbiroli said that he’s always done a lot of renovations and improvements, even An apartment at 423 East 81st Street before and after a $45,000 renovation. during the downturn. But he has an added incentive now that the sales market seems on the road to recovery: the potential of selling the buildings or converting them to condos or co-ops down the line. “What’s different now, as opposed to two years ago, is we take it to the next level,” said Sbiroli, who converted several Flushing buildings in the 1980s. “These renovations are done not just with a higher rent in mind, but with a conversion in mind.” At 423 East 81st Street, for example, Sbiroli did a $45,000 gut renovation on a fourth-floor unit — entirely redoing the bathroom, kitchen and fireplace, as well as adding hardwood floors mand higher rents, especially in a tight not white, appliand even a wall. The market. And when an apartment is newly ances are imporapartment, 4RW, renovated, a tenant generally stays lon- tant. previously rented Thus far, most ger. That helps landlords save money, according to Joseph Sbiroli, principal of landlords are focus- A kitchen at 464 West 23rd Street before and after for $1,460 and ordinarily spent 30 to 40 Ventura Land Corp., which manages just ing on renovating a renovation. individual apartdays on the market. over 1,000 apartments in the city. After the renovation, Last year, for example, Sabet reno- ment units rather than common it rented for $1,689 vated 464 West 23rd Street. A large oneafter two weeks on bedroom in the building, 4R, used to spaces in buildthe market. take four to 10 weeks to rent for around ings, like hallways “This is one of $2,400 per month, according to Citi and stairwells. But those times where Habitats listing agent Jason Saft. But in those larger, pricthe renovation is November, after Sabet redid the bath- ier renovations not justified by the room and added stainless steel appli- will likely increase bump in rent,” Sbirances, as well as a washer-dryer, to the as the market imkitchen, the unit rented in just five days proves, according to Halstead Property oli said. “I could have spent $15,000 to get the same rent or maybe $100 less, but that for $2,995 without any incentives. With- Vice President Michael Bergen. “Right now, [landlords] seem to be renovation is really an act of faith based out the renovation, the unit would likely be renting for around $2,500 per month, more focused on the apartments them- on where the market will be in a couple of selves, but down the line they’re looking years and on the conversion value.” Saft estimated. The renovation has doubled the potenThe kitchen is the most important toward that,” Bergen said. Moyal is already seeing this in some tial sale value of the apartment, Sbiroli thing for landlords to upgrade in an apartment generally, followed by the bath- buildings — one of the landlords he works estimated. “That’s the real bang for your room, according to Moyal, who works with has recently undertaken a $100,000 buck,” he said. TRD

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Freddie and Fannie offer summer deals

Mortgage giants give bonuses to real estate agents BY KENNETH R. HARNEY ooking for a deal where the home seller pledges in advance to contribute potentially thousands of dollars to your closing costs? If so, check out the summer sale terms available from two of the largest and most motivated sellers of foreclosed homes in the country — Fannie Mae and Freddie Mac. You may know the companies for their troubled mortgage businesses or the financial foibles that crashed them into the control of federal conservators in 2008. But the flip side of those problems is that they now have massive numbers of properties taken back through foreclosures. Fannie Mae had 153,549 of them at the end of the first quarter. Freddie Mac owned 65,174. That’s nearly 220,000 houses for which they need to find new owners — quickly — or they’ll rack up even bigger losses for taxpayers. To move that bulging inventory, both companies have begun timelimited sales campaigns with significant incentives for new owneroccupant purchasers — no investors allowed — and even extra cash for the real estate agents who bring buyers to the table. Fannie and Freddie both are offering to pay up to 3.5 percent of the price of the house toward buyers’ closing costs, plus they’ll hand over a bonus of $1,200 to participating real estate agents. Fannie’s program covers properties on which contracts are accepted and close no later than Oct. 31. Freddie’s sale requires contracts no later than July 31 and closings by Sept. 30. Fannie’s program even offers mortgage money to help finance these purchases, sometimes with as little as a 3 percent down payment. The company also has what

it calls a “renovation mortgage” option that provides additional mortgage amounts to cover fix-ups. Freddie does not offer special mortgage financing for buyers during the sale period, but has other inducements, including two-year home warranties and 30 percent discounts on appliances. All the foreclosed properties are listed with photos and descriptions at either HomePath.com (Fannie) or HomeSteps.com (Freddie), where buyers can search by price, local markets, zip codes and entire states. They run the spectrum from expensive detached homes, lowbudget urban condos and suburban tract townhouses nationwide. Featured offerings on HomePath recently included: • A six-bedroom, five-bath house in Littleton, Colo., with 4,990 square feet of space. Asking price: $424,900. • A two-bedroom condo with 1,164 square feet in Las Vegas for $43,999. • A $184,900 two-bedroom, one-bath home in Long Beach, Calif. • A four-bedroom, two-bath house in Brentwood, Md. Asking price: $65,000. The summer clearance sales are part of rapidly accelerating efforts by both companies to get ahead of the tidal waves of foreclosures flowing into their portfolios in recent months. During the first quarter of this year alone, Fannie Mae acquired 53,549 properties. However, during the same period, it managed to sell off 62,814 houses — a record number that produced a net outflow. Freddie Mac also sold more foreclosures than it took in during the first quarter, acquiring 24,709 houses and selling 31,628. In some parts of the country, Freddie’s of-

ferings are even stimulating multiple bids on houses, according to spokesman Brad German. Both companies are targeting only buyers who plan to live in the homes — rather than nonoccupant investors who want to flip or rent them out — as part of a larger neighborhood real estate stabilization effort. The contribution of up to 3.5 percent of the sale price toward the buyers’ closing costs can be substantial. On a $200,000 house the buyers could receive $7,000 toward their closing expenses, which might well be the difference between their ability to afford to buy or not. Combine that with additional incentives, such as favorable financing or warranties, and the total package can look extremely attractive to first-time and moderate-income purchasers. Are there downsides or restrictions for would-be buyers on either HomePath or HomeSteps? Absolutely. Top of the list: Keep in mind that these are foreclosed properties and some of them have been abused by previous occupants. Fannie and Freddie both do repairs to bring houses up to what they believe are marketable standards, but don’t be surprised to find that they are not in pristine condition. Second, though foreclosures do generally sell for less than non-distressed houses, you need to understand that both Fannie and Freddie are in the business of maximizing returns on assets for their federal creditors. Do not assume that the listing prices are deep-discount giveaways. Be diligent in comparing prices and values before bidding and negotiating — just as you would with any other real estate purchase. Ken Harney is a syndicated real estate columnist.

G O V EIRNN MBERNITEBFR I E F S High Line, the next generation The second section of the High Line park on Manhattan’s West side officially opened last month. Running from 20th Street to 30th Street, the new phase is an extension of the first part of the park, The High Line which opened two years ago along a former freight rail structure. The project includes a public gathering spot known as “The Lot at 30th Street,” with a 350-seat bar operated by chef Tom Colicchio, a collection of food trucks and a public art exhibition. At the ribbon-cutting ceremony for the second phase, Mayor Michael Bloomberg announced a $5 million challenge grant to Friends of the High Line to help finance the third section of the park. When completed, the High Line will be 1.45 miles long and stretch to 34th Street.

Dumbo ‘incubates’ new businesses The New York City Economic Development Corporation last month announced a $250,000 grant to establish a business incubator to support technology startups in Brooklyn’s Dumbo neighborhood, according to Crain’s. The Polytechnic Institute of New York University will operate the incubator, which is slated to become fully operational by this fall. NYU-Poly signed a three-year lease with Two Trees Management, which will offer the 6,440-square-foot space, located at 20 Jay Street, rent free for 20 Jay Street six months. Upon opening, the project will become New York City’s ninth city-sponsored business incubator.

City cracks down on illegal apartments In the wake of fire-related fatalities in improperly subdivided New York City apartments, Mayor Michael Bloomberg announced a new initiative to locate illegally converted units, Crain’s reported. The plan will identify illegal conversions by tracking buildings’ ages, locations, financial records and code histories, and assign investigators to them within 48 hours of an illegal sublet being reported. In the past, inspectors have not been able to easily access these apartments because they were frequently turned away by landlords. Last year, inspectors were only able to enter 45 percent of the apartments they visited. But the new plan calls for inspectors to be joined by other officials, most notably uniformed firefighters. Critics said the plan could place too much of a burden on the city’s fire department, which may lose up to 20 fire companies due to budget cuts, according to the Daily News. FDNY chief of fire protection Thomas Jensen told the Daily News that fire companies “could be quite taxed” by the new policy. Compiled by Russell Steinberg

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Sellers getting greedy Convinced of recovery, some sellers are trying to leapfrog comps

BY JAKE MOONEY hen the real estate market crashed, tales of lowball offers abounded in New York: Buyers were in many cases demanding discounts of 25, even 30 percent, off asking prices. Those days, relieved brokers say, have passed. But in this steadier-if-somewhatuncertain market, some say another frustration has emerged. Sellers, emboldened by the market’s relative improvement in the last year, are now the ones pushing their luck. While brokers and analysts agree that the market is still fragile, they say some sellers are getting greedy and demanding prices higher than currently justified. To rationalize those higher prices, they are pointing to the recent bounce in sales activity and rejecting comps they feel are too low. “In the current climate, sellers are not asking; sellers are demanding,” said Patricia Levan, president of Levan Real Estate in Manhattan. “Some sellers are demanding unrealistic prices, and they will find an agent to support that fantasy.” Levan recently parted ways with a client who was selling a condo unit at 212 East 47th Street. The apartment — which was originally listed at $765,000 and later reduced to $745,000 — had no offers. The problem, Levan said, was that an apartment on the same line (but a few floors up, and renovated) had sold for $675,000 in the fall. The seller, however, wrote off that lower comparable as the product of a bygone weak market and refused to lower the price further. Eventually, the seller pulled the unit off the market. The case, Levan said, illustrates that the market is in a new, tenuous place. More sellers are rejecting sales comps from the downturn because they believe they can find buyers to pay more. “I don’t think sellers realize how closely tied they are to what’s sold in their building,” she said. “That comp is really never going to go away. Maybe in a really, really good market it’ll be more overlooked, but right now, it’s not.” While not all sellers are digging their heels in, the ones that are, Levan said, have created something of a slowdown in the market and are making it harder to get deals done. The experts, meanwhile, are not quite as optimistic as the sellers. Jonathan Miller, president and CEO of the appraisal and consulting firm Miller Samuel, refused to even use the word “recovery” to describe the current market. “It’s a consistent, stable market — not a booming market — certainly far better

32 July 2011 www.TheRealDeal.com

than it was a couple years ago, and the word for that is ‘rebound,’ not ‘recovery,’” Miller said, adding, “When I hear the word ‘recovery,’ to me it implies that we’ve recovered, and the market’s going to go up now, and I contend that we don’t really know.” Miller said, however, that conditions exist to make some sellers less ﬂexible. The volume of sales has generally been trending upward, he said, with an unusual spike in activity in March and

said she is seeing overpriced properties hit the market and fall ﬂat. Often, she said, that’s a result of sellers or their brokers setting a high asking price “to allow room for negotiations.” But she said that such a strategy can backﬁre if the high price causes the listing to sit for too long and get stale. Price cuts at that point can send

another upswing more recently. That, he noted, is consistent with spring’s status as “the Super Bowl of the annual housing market.” But coming off the last few dismal years, the back-to-normal seasonal bounce

his price assessments, and those of his sellers, were far apart. One listing, an 11,000-square-foot, industrial Clinton Hill building with a residential component, was appraised 18 months ago. Last fall, a buyer was willing to pay more than the appraised value and had even signed a contract. But the seller backed out and then turned down an offer this spring for twice the appraised value. The building is now off the market and Stockwell is marketing the ground-floor commercial space as a rental. Both buyers remain interested, he said, but his seller does not want to sell at the current market prices. “Her thought was that values in rural Asia were more than $200 a foot, and she didn’t understand why she couldn’t get a lot more in Brooklyn,” Stockwell said. In another case, a client selling a 2,000square-foot loft in Tribeca rejected a deal to sell the apartment for significantly more than four recent comps in the building. The seller, who in the end decided to rent the unit out, believes its resale value will rise by 50 percent over the next five years, Stockwell said. “And these are very smart people making these choices,” he said. “It really highlights that there’s no true consensus on where the market’s going, and maybe that’s because there’s no true consensus on where the economy’s going.” Miller dismissed the idea that seller inflexibility could slow the market’s recovery. “For that to happen, there would have to be a significant disconnect between sellers and reality, and I’m not sure what would drive that,” he said, noting that macroeconomic news, in recent months, has been downbeat. Still, Stockwell said, there are plenty of potentially negative consequences on an individual level. “I’m not trying to say the market’s not good,” he said. “But it’s not a market in which you should get greedy, because you might regret it later.” TRD

“In the current climate, sellers are not asking; sellers are demanding. Some sellers are demanding unrealistic prices, and they will ﬁnd an agent to support that fantasy.” Patricia Levan, Levan Real Estate has resulted in stronger seller optimism and a belief — whether true or not —that the market is in recovery mode. “You do see sellers who see an increase in demand and think that they can be a little bit tougher, a little bit less negotiable,” he said. Emma Hamilton Malina, a senior associate broker at the Corcoran Group,

the message that the property is ﬂawed or the seller is desperate, leading to even lower offers. Jeff Stockwell, a senior vice president at Stribling and Associates, said because sellers see some improvement in the market they are rejecting perfectly good offers and demanding higher prices. He recalled two recent listings in which

ILLUSTRATION FOR THE REAL DEAL BY PETER BONO

Qualifying qualms

Brokers share tips for making sure their clients have enough cash BY VANESSA WEIMAN

eal estate brokers must regularly ask their clients a question that most people consider to be the height of rudeness: “How much money do you have?” But buyers’ brokers need to ﬁnd out what their clients can afford — and what they are worth — before showing them apartments or submitting their ﬁnancials to a co-op board. “We’re a city of 80 percent co-ops, [and] bringing a perspective purchaser to a co-op if you haven’t asked about their net worth is a waste of time,” said Kathy Braddock, co-founder of Rutenberg Realty. That’s especially true in today’s strict lending climate, in which banks

have stringent requirements for mortgages. “You have to be informed about your clients, because you have to navigate this very different real estate market,” said Brenda Hersh, a senior broker at Buchbinder & Warren. “If you put a bid in and ﬁnd out that you can’t get the ﬁnancing — you don’t want to go there.” Such a stumble can kill a broker-buyer relationship, so brokers have to make sure they get the numbers they need. But eliciting that information must be done delicately. The Real Deal asked several real estate brokers how they approach this touchy subject.

How do you broach the subject of net worth? Deborah Fredericks, Deborah Fredericks Realty: “The best way to ask is to suggest that certain buildings want a certain ratio of the value of an apartment to net worth — some want three times the assets after you close, for example. Then [you can] ask, ‘Would you be able to look in those buildings?’” Daniela Kunen, Prudential Douglas Elliman: “I develop a rapport with them … then tell them that I have to ask personal questions such as what is their liquidity, their income for the last two years, and their debt. They’re invasive questions, but no one wants a board turn-down.” Brenda Hersh, Buchbinder & Warren: “I have them fill out the net-worth statement from REBNY. And I also tell them I’m going to ask personal questions, but it’s confidential.” Susan Forrest Reynolds, Rutenberg Realty: “I bug them up front. Rutenberg has documents about what to expect when you’re buying that I have clients read, so I’ve prepared them. The question sounds more awful than it really ends up being.” Kevin Ferrara, Bond New York: “I explain up front what they can expect. … I [don’t want] to have them say, ‘You didn’t tell me this earlier.’ I also use the REBNY form.” Gea Elika, Elika Associates: “I ease into it. ... If it’s a client who’s looking at an apartment that’s $5 million or above, I ask, ‘What do you do for a living?’ and try to validate it without it being too personal. If it’s essential, I ask their accountant to supply a letter of net worth. I don’t make them fill out REBNY forms; if they’re legit buyers, they will answer the questions.” Wendy Sarasohn, the Corcoran Group: “I grew up in a family where money was not discussed, so it’s always been an uncomfortable subject for me. And when my client is a man, I always feel that it’s almost like asking about the size of his penis; it’s easier for me to make a wom34 July 2011 www.TheRealDeal.com

lot of money take it personally, thinking they don’t have enough. If they’re … worth $10 and $25 million and up, they’re used to the process.” Sarasohn: “One person didn’t want to ﬁll out a ﬁnancial form because he felt he was above it, but then I mentioned a few names of people who had done it who were higher up on the Forbes billionaire list, and he was okay with it. Some clients also think that if they tell me how much they have, I’ll try to sell them a more expensive apartment.”

How do you ensure that the information you’re getting is accurate?

an comfortable with the question. But in either case, I usually say: ‘Because we’re going to be asked ﬁnancials, I’m going to send a REBNY form and you can have your accountant ﬁll it out.’”

More and more clients are talking to you via e-mail, so that’s a great time to do it too, because you can pose a series of questions and they’ll answer you.”

Do you ask over the phone or in person?

How do different kinds of buyers react when you ask for this information?

Elika: “If I sense the person is hesitant because we haven’t met face to face, I suggest we meet.” Sarasohn: “I do it over the phone, so there’s a buffer.” Ferrara: “It’s deﬁnitely an in-person conversation.” Fredericks: “It all depends; if you’re discussing it over the phone, you do it then.

Kunen: “Foreign [buyers] have a very hard time understanding the whole process — why [a co-op] could turn you down when you’re paying cash for an apartment, for example. They’ll say, ‘I’m putting $10 million down for an apartment; don’t they think I can pay $5,000 a month?’ They normally buy condos.” Ferrara: “I think people who don’t have a

Fredericks: “You never know; you have to trust them.” Hersh: “I ask for bank statements and mortgage statements and their ﬁnancial broker’s number, and the client signs a waiver that the broker can send me statements if needed. Most clients understand that this is a different era of showing real estate. If they don’t want to go through this process, then they’re not a serious buyer.” Reynolds: “I usually trust that clients have no reason to lie. What would be the point of lying? But I go through the paperwork with a ﬁnetooth comb.” Kunen: “I assume they’re being straightforward, because they don’t want to be turned down. I will say that there is sometimes confusion as to what is liquid and what is not. For example, trust funds — what are the terms and conditions of invasion of that fund? Can recipient access funds anytime they want, or do they need to ask two other people for permission?” Elika: “Over the course of 10 years, about 10 percent of clients have turned out not to be legit.” Sarasohn: “In the old days people would say one thing but the board package wouldn’t match. … [Now], most people can be Googled.” TRD ILLUSTRATION FOR THE REAL DEAL BY PETER BONO

Marketing And Exclusive Sales Agent

Title’s battles Insurance industry, hurt by slump in home sales, struggles with foreclosure woes

BY CATHERINE CURAN ate one Thursday afternoon last month, title insurance agent Rafael Castellanos got an urgent call from an attorney whose client needed a title search on a Brooklyn home that was selling three days later in a foreclosure auction. Title insurance agents — who work with underwriters to pro-

vide insurance for buyers to protect against unforeseen problems on the titles of their new homes — typically conduct extensive research to ensure that there are no troubles with a title. The goal is to ferret out and resolve any “clouds,” such as outstanding liens on the title or defects in the chain of ownership, so they don’t come back to haunt the buyer later. Title insurance gets a bad rap

among consumers for the high cost and the fact that lenders typically require buyers to take out policies. But even cash buyers are advised to protect themselves from challenges to their ownership down the line by paying for title insurance from the get-go. Castellanos, a managing partner at Expert Title Insurance Agency in Manhattan, got cracking on the search ﬁrst thing the next morning. Like many title insurance agents in New York and elsewhere in the country, he’s seen revenue decline in recent years, and he was keen to convert this potential client into an actual, premium-paying client. (Title insurers collect their one-time fee only

after a policy is sold, and the housing slump’s lower volume of home sales means fewer policies written.) In New York, the nation’s thirdlargest state for title insurance, premiums barely eked out a 1 percent gain to $165 million in the ﬁrst quarter. Nationwide, operating losses widened last year to $206 million, while insurance premiums written were essentially ﬂat at $9.61 billion after four straight years of declines, according to industry trade group American Land Title Association. “People were hoping this spring was going to be heavier volume, a rebound,” said Brian Tormey, executive vice president of TitleVest. “[But instead] volume of transac-

tions is dropping off, both of refinancing and new purchases.” For Castellanos’s part, the Monday after he received that urgent call, his research had already uncovered a property file in complete disarray. Among other flaws, the property’s tax lot and block were misindexed, and the prior owner had not been personally served with a notice of foreclosure. Given these facts, Castellanos rated the property uninsurable — a conclusion he’s reaching all too often these days. “Right now, 60 to 70 percent of the foreclosures have problems,” said Castellanos, who does just over 30 percent of his business in Manhattan and nearly 25 percent of his business in the city’s other boroughs. “We find all these problems, and we have to tell the client, ‘I’m sorry, we can’t insure this.’” Heading into the second half of 2011, Castellanos and other title insurance executives can add intensifying foreclosure-related woes to a lengthy and growing list of challenges in their industry. Those challenges range from increasing financial losses to widespread consolidation through the industry — there were just 54 operating underwriters nationally last year, a 43 percent drop from 2008. That has a direct impact on both how many title insurance agents the industry can support, and how the remaining agents have to split up the pie of available business. Industry sources estimated that there are about 950 title insurance agents in New York State, but they are not licensed, so it’s hard to get exact figures. The industry also has a tainted reputation because of the common practice of real estate brokers steering unwitting consumers to a preferred title agent without disclosing that the broker and agent share a corporate parent. In late May, the New York State Insurance Department issued an opinion aimed at addressing this practice, making it illegal for real estate firms to place attorneys on an “approved” or “recommended” list in exchange for referring clients to the firm’s affiliated title agent. As The Real Deal has reported, April’s abrupt closure of Woodbury, N.Y.-based Titleserv and the laying off of an estimated 160 employees, followed by a raid on the firm by the FBI, marked another black eye for the industry locally. Now, local industry insiders are bracing for more foreclosure fallout, since foreclosures are a growing part of the business — for Continued on page 86

36 July 2011 www.TheRealDeal.com

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Untangling the knots

hese days — with credit tight and lawsuits sprouting like weeds — no real estate transaction is simple. Whether it’s a one-bedroom condo or a distressed office building, sales are often slower and more complicated than expected. That said, some deals have so much “hair” on them that they deserve special recognition. This month, The Real Deal took a behind-thescenes look at some of the most complicated deals in the last year. These include some of the city’s highest-profile transactions, such as Google’s $1.77 billion purchase of the Chelsea office building at 111 Eighth Avenue. The building’s owners were able to lure the technology behemoth into an all-cash deal, but only after they spent a nerve-racking two weeks — during which the property was not actively marketed — waiting for Google’s top brass to approve the record-setting sale. When Vornado Realty Trust decided to buy the underwater office building One Park Avenue, it had to scramble, with only weeks to negotiate a deal with the property’s owners and lenders and work out a lease expansion with NYU Langone Medical Center, all while fending off the advances of opportunistic real estate operator Scott Rechler. Some extremely hairy deals aren’t a race against time, but rather a waiting game. For example, the sale of 607 Hudson Street went into contract in 2007. It didn’t close for almost four full years — one of the city’s longest purchase agreements for a straightforward real estate transaction, industry experts said. Others require extraordinary measures. For example, in late 2010, the Manhattan County Clerk was handed a cashier’s check for over $250 million intended to put an end to litigation in the now-famous battle over 3 Columbus Circle. It didn’t work, but it helped lead to a resolution in the deal. Meanwhile, for clothing retailer Syms, completing a deal for a coveted new Fifth Avenue storefront required squeezing into a space that initially appeared far too small. The apparel company was able to make it work by cobbling together three separate spaces on different floors — which involved $1.5 million worth of construction by the landlord.

A behind-the-scenes look at some of NYC’s hairiest residential and commercial deals of the last year

Residential properties may be priced lower than their commercial counterparts, but the deals can be equally epic. That’s what one homebuyer discovered when she found a bargain-basement ﬁxer-upper in Downtown Brooklyn — then spent a year waiting to take possession of it while wrangling with banks, apprais-

ers and even ornery pit bulls. Finally, the recent sale of the palatial Henry T. Sloane mansion required 48 hours of frenzied deal-making as a Ukrainian billionaire rushed to buy up the property’s debt in time for a scheduled foreclosure auction. For more on all of these deals, read on. BY CANDACE TAYLOR

Google’s ‘search’gets a hit A nerve-racking break in active marketing helps get the Internet giant’s record-setting building buy done BY ADAM PINCUS s any theatergoer knows, there’s nothing like a pause in the action to build the dramatic tension. And that’s exactly what happened when Google — the behemoth technology company based in Mountain View, Calif. — asked for (and quietly received) a several-week break in the active marketing of 111 Eighth Avenue during the second half of Novem-

ILLUSTRATION FOR THE REAL DEAL BY DAVID COLE

ber, when it became serious about buying the building. Google, which was represented by CB Richard Ellis, wanted to make sure that the $1.77 billion (plus millions in additional expenses) it was about to spend on the 2.9 million-square-foot Chelsea ofﬁce building was a good price. “That was a very nerve-racking time,” said one insider, about the late-fall market-

ing pause that came two months after the story broke that the building was for sale for about $2 billion. Paul Pariser, co-CEO of Taconic Investment Partners, which was a co-owner of the building, said “no one liked [the break in marketing] because people can change their minds.” Taconic owned the property with investment ﬁrm Jamestown Properties, and the New York State Common Re-

tirement Fund. Doug Harmon of Eastdil Secured — who had managed several trophy asset sales for Taconic and Jamestown in recent years — handled the sale. Pariser, however, gave Google a yearend deadline to close, which put additional pressure on the search engine wizards to make a decision. Of course, at the time nobody knew whether Google’s search would come up empty. But a few months later, as the world now knows, the record-breaking sale became the nation’s largest investment deal of the year, and the largest acquisition by a user ever. Indeed, it was the exclamation point at Continued on page 84

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Race for a recap

With foreclosure clock ticking, Vornado pulls off purchase, nails down key lease and recapitalizes One Park Avenue BY ADAM PINCUS e are going to have a gun to our head,’” one real estate insider recalled top Vornado Realty Trust executive Glen Weiss saying, once the office giant decided to go ahead with its acquisition of One Park Avenue. In order to buy and recapitalize the building, Vornado had only weeks to nail down a large lease expansion with NYU Langone Medical Center, pay off mezzanine lenders, secure the first mortgage lender, and work out a deal with Murray Hill Properties and Cerberus Capital Management, the property’s owners. It was sometime in January of this year, according to sources, that Vornado got serious about acquiring the building, which was underwater, as many Midtown properties were. One Park had been purchased at the peak of the market in 2007 by Murray Hill and Cerberus for $550 million. In December, opportunistic real estate operator Scott Rechler — chairman and CEO of RXR Realty, which controlled the senior mezzanine debt and had been using that to position for a foreclosure of the equity interest to take control of the property — agreed to back off his foreclosure proceedings until the end of February. The move, which was hammered out between Rechler and Murray Hill (which was represented by the Carlton Group’s Howard Michaels), was designed to give the parties breathing room and time to work out a sale. But in exchange for that breathing room Rechler wanted to be paid handsomely for his mezz piece. And he didn’t want negotiations on a sale to drag on. He held a stick over the parties: Complete the deal by the end of February, or he’d move to take control of the 932,000-square-foot office building. “We would have taken title to the building, recapitalized it, and re-leased it,” Rechler said. The newly imposed timeline was menacing and looming. Yet the challenges to stabilize the 86year-old building, located on Park Avenue between 32nd and 33rd streets, did not begin with Rechler. He entered halfway through Norman Sturner’s odyssey. On March 1, 2007, during that optimistic period, Sturner, president and CEO of Murray Hill, and partner Cerberus closed on the $550 million purchase, loading the building up with $375 million in a first mortgage and an additional $100 million in mezzanine debt, and ultimately putting in $120 million in equity. At the time the building had tenants such as publisher

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American Media, NYU Langone and beauty giant Coty. Sturner expected he would lease space that was being given up by expiring tenants for higher rents. But then the downturn hit, and by June 2009, Fitch Ratings reported Murray Hill had burned through most of an $18 million reserve to cover interest payments.

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In April of 2010, Cushman’s Michael Rotchford, head of the firm’s investment banking group, was providing strategic advice to NYU, laying out a series of options for the school to consider. One was to buy the senior piece of mezzanine debt and foreclose. A second was to buy another location, either a commercial condominium or another building. Sources said the school looked on the West Side on 33rd Street, and at the 560,000-square-foot Pfizer Building at 685 Third Avenue. But as NYU was sifting through its options, before it finalized the deal, the

NYU Langone Medical Center considered purchasing One Park Avenue through mezz debt.

One Park Avenue, top, averted foreclosure and got scooped up by Vornado, headed by chairman Steven Roth (bottom left). RXR Realty’s Scott Rechler (bottom center) agreed to back off his foreclosure proceedings. Struggling building owner Norman Sturner (bottom right) found a partner in Vornado.

By early 2010, sharks were circling the property. Around that time, NYU Langone Medical Center, which housed its administrative ofﬁces in the building and was one of the property’s biggest tenants, was reassessing its 187,000 square feet in leases, which were due to expire in 2013 and 2015. The medical center — represented on the leasing side by Cushman & Wakeﬁeld brokers Bruce Mosler, chairman of global brokerage; Josh Kuriloff, vice chairman; and Mark Mandell, executive director — was in the midst of a $2 billion expansion. Increasing its administrative footprint was one tiny piece of that puzzle. The question was how to expand — in One Park, or at a new location?

ground underneath the capital markets was shifting. To hold on to the property, Murray Hill and Cerberus needed a partner to inject more capital into the building. In August 2010, RXR stepped in and paid REIT Winthrop Realty Trust about $2.2 million for the senior mezzanine note on the building with a face value of $25 million. By late November, Helios AMC, the special servicer for the $375 million ﬁrst mortgage, had declared the building’s mortgage in default and demanded the loan be repaid. Sturner reached out to Michaels, Carlton’s CEO and chairman, the day before Thanksgiving. By December they had convinced Rechler to hold off on foreclosing.

And in January, Vornado, which had gotten wind of the fact that the property was looking for a buyer, got serious about the building. “In a sense it was a good asset with a broken financial structure,” said a source familiar with Vornado’s thinking. Cushman got two calls in quick succession in early 2011 saying Vornado and Murray Hill had struck a deal. “[Sturner] called, it’s my recollection, and said, ‘We have good news. Vornado wants to do this deal.’ And within minutes [Weiss, senior vice president at Vornado] called,” Cushman’s Kuriloff said. The multiple parties involved — Kuriloff pegged the number at 27 —had to act quickly, and were given just 30 days. In the end, as has now been reported, Vornado put in $137 million in cash and got a 95 percent interest of the building. In a 21year deal, NYU nearly doubled the size of its space to 367,584 square feet. And, in choosing to lease, NYU became a linchpin in Vornado’s recapitalization of the building. Indeed, NYU’s participation helped Vornado obtain debt from Morgan Stanley. And, the medical center’s strong credit rating allowed Vornado to pay up to 1 percentage point less for its financing. As a result, Vornado cut NYU’s rent by several dollars per foot, a source close to the deal said. “The most fascinating part was we did the deal three times,” Kuriloff said. He noted that they first tried negotiating with Murray Hill alone, then with Rechler and Murray Hill, and finally found success with Vornado and Murray Hill. Mosler called the deal a “win-win” for both parties. “We knew we were at the bottom of the [economic] cycle. We knew [NYU Langone] had some economic constraints. We had a window in which to do a deal or not,” he said. As NYU’s lease deal was closing in February, “there were black cars delivering lease drafts overnight to all of us,” Kuriloff said. That’s in addition to the late-night meetings and conference calls. Weiss interrupted a Disney family vacation to join a Sunday video conference. Base rents start in the mid-$40s per square foot for NYU and rise to the mid$50s over the 21-year term, another source noted. While a few of the mezzanine lenders took major haircuts, others made out well. The $375 million first mortgage was paid out at par, and RXR was paid about $22 million for the mezz piece it bought for $2.2 million. Sturner and Cerberus, who lost millions in equity, were paid “something” and given nominal ownership interests. The overall capital stack was cut from about $595 million to about $430 million. And for Sturner, the day of the closing held a particular irony. The deed transferred on March 1, four years to the day from when he bought the property. TRD

PHOTOGRAPH OF STURNER FOR THE REAL DEAL BY HUGH HARTSHORNE

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Pre-auction frenzy Behind-the-scenes negotiations pave way for the Sloane mansion sale

BY CANDACE TAYLOR he Henry T. Sloane mansion made headlines in 2008 when it hit the market for $64 million, an eyebrow-raising price even for the dizzying heights of the boom. Had it sold at that amount, it would have become the most expensive home sale in New York City history. Instead, it prompted the city’s priciest-ever residential foreclosure auction last month, according to PropertyShark.com. Located at 18 East 68th Street between Fifth and Madison avenues, the mansion has been the object of public fascination since its inception. Henry Sloane was a Gilded Age carpet manufacturer whose wife Jessie scandalized New York society in 1899 by taking up with another man (and marrying him just hours after her divorce to Sloane was final). Sloane responded, the story goes, by hiring architect C.P.H. Gilbert to build him a new, grand mansion. The resulting six-story, limestone house has a marble staircase and a wood-paneled ballroom, with the original oil-painted murals still in place. But when investors John Rice III and Joseph Ingrassia — managing members of Manhattan-based Capstone Business Credit, a private finance and investment company — bought it for $20 million in 2007, the upper floors had been divided into more than 10 rental apartments. “Some of the grandeur was taken out of it,” explained Matthew Lesser of the brokerage Leslie J. Garfield & Co. After acquiring the mansion, Rice and Ingrassia set about removing the building’s tenants so the property could fetch top dollar as a single-family mansion. But like many investors during the boom (Stuyvesant Town’s notoriously illfated investors being the most famous example), they underestimated the difficulty, and cost, of removing tenacious rent-stabilized tenants. “It took a little bit longer and cost more to vacate the property” than the owners expected, said Marcus & Millichap vice president Peter Von Der Ahe. The owners also leveraged the house to the hilt, borrowing some $28 million from real estate investment firm Madison Realty Capital, and also taking out a second mortgage of $5.5 million with the bridge fund North Hill Capital Management (though that loan also involved another property, Von Der Ahe explained). When Rice and Ingrassia put the property on the market in February of 2008, brokers deemed the $64 million price tag far too high. “It was completely overpriced,” Lesser said. When Lehman Brothers collapsed a

PHOTOGRAPHS FOR THE REAL DEAL BY CHRIS MARTIN

few months later, the prognosis only worsened. The house saw price chops of $54 million, then $39 million. Finally, with the owners in default, the lenders ﬁled to foreclose. By the time Marcus & Millichap’s Von Der Ahe, Seth Glasser and Scott Edelstein took over the listing in April of this year, the house was priced at $37.9 million and headed for a foreclosure auction. Due to fees and penalties, Rice and Ingrassia now owed more than $42 million to their creditors. Around that time, the property caught the eye of Ukrainian-born billionaire Alexander Rovt. He already had a mansion on 63rd Street between Second and Third avenues, which he’d purchased from Hiroaki “Rocky” Aoki, founder of Benihana restaurants. But a few years later, Rovt “decided he wanted to be further west,” said Lesser, who has worked with the fertilizer magnate for several years. Rovt wanted a particularly wide house, so the 36-foot-wide Sloane mansion quickly came on to his radar. He tried for months to buy it as a short sale, but the various creditors could not agree on a price. “We tried to make a deal where everybody would get paid, but no one could agree on how much of a haircut to take,” Von Der Ahe said. Rovt wasn’t ready to give up, however. With a foreclosure auction set for June 22, the various parties looked for a way for him to buy the house, ideally while avoiding the competitive atmosphere of an auction. “We all determined that the best way for him to do that was to buy the mortgage before the auction, instead of participating in the auction,” explained Von Der Ahe. So, in the middle of last month, Rovt and Lesser set up meetings with both Madison and North Hill hoping “to go in and negotiate and walk out with the deed,” Lesser said. North Hill, however, “played hardball,” he said. “We made an offer and it wasn’t sufﬁcient for them, and we walked out.” Madison’s loan was senior to North Hill’s, so it was more receptive to selling the note at a discount. “Of course, they didn’t want to lose money, but we ultimately reached an acceptable offer with them,” Lesser said. Rovt paid $33 million for the note, Marcus & Millichap said. Without North Hill’s cooperation, a foreclosure auction was unavoidable. But if Rovt “all of a sudden became the note holder, then he would essentially win the auction,” Von Der Ahe said. Accepted offer in hand, the brokers and attorneys involved started working around the clock to orchestrate the loan sale in time for the auction. There were

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thousands of pages of documents to review in only a few days. “We struck the deal only days before the auction, and brought the whole note sale to fruition within 48 hours,” Von Der Ahe said.

Street, no one bid against Rovt, so the property fell to him as the debt holder. Now, Rovt is excitedly planning a “substantial renovation” to prepare the house for his own use, Lesser said. His 63rd Street house is now on the market with Lesser for $27 million.

“We struck the deal only days before the auction, and brought the whole note sale to fruition within 48 hours.” Peter Von Der Ahe, Marcus & Millichap

Top: The Sloane mansion at 18 East 68th Street sold to Ukrainian-born billionaire and fertilizer magnate Alexander Rovt at a foreclosure auction last month. Bottom (clockwise from top left): Marcus & Millichap’s Peter Von Der Ahe, Leslie J. Garﬁeld & Co.’s Matthew Lesser, and Marcus & Millichap’s Scott Edelstein and Seth Glasser.

Rovt’s payment was wired into Madison’s account only hours before the auction. “It was down to the wire, literally,” Lesser said. Despite a packed auction at 60 Center

As for the brokers, they received negotiated fees rather than commissions, since the property sold at auction. Rice, Ingrassia and North Hill did not fare as well; the money they invested in the deal was “completely wiped out,” Lesser said. TRD www.TheRealDeal.com July 2011 41

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A move under its belt

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Syms makes a too-petite storefont work with help of a complicated combination BY ADAM PINCUS rying to squeeze into a size that’s too small doesn’t usually work — whether it’s a person dressing for a night on the town, or a retailer looking for its flagship site. Yet with a creative tweak, clothing retailer Syms managed to wriggle into a new Fifth Avenue storefront it badly wanted. The apparel company liked the retail space at 530 Fifth Avenue, but thought it was just too petite. To get around that, Syms’ brokers, along with landlord Joseph Moinian, arrived at the idea of also leasing a piece of second-floor office space. Unfortunately, the office space on the second floor did not connect with the available retail space. “It was kind of far-fetched. We had people punching through bathrooms,” said Robin Abrams, executive vice president at Lansco Corp., which represented Syms and won the top retail award from the Real Estate Board of New York last month for orchestrating the tricky deal. There were more complicating problems. For one, the spaces were at different heights in the building, and there were elevators needed for upper-floor office tenants that could not be altered. Also (and perhaps the most time-sensitive of the problems to surmount): The approximately 10,000 square feet of office space that Syms needed was about to be leased by someone else. However, Syms — which in 2009 bought discount chain Filene’s out of bankruptcy — was motivated, facing an expiring lease at its five-floor, 70,000-square-foot store at 400 Park Avenue, to make a move. The retailer had been in its Park Avenue location on the corner of 54th Street since

From left to right: Lansco Corp. agents Robin Abrams, Howard Dolch and Lisa Rosenthal in front of 530 Fifth Avenue, where their client Syms made an unlikely space work for its soon-to-open store.

1994. It had to either commit to a five-year extension or find a new home. So, in the spring of 2010, with its team of Lansco brokers — Abrams, Howard Dolch and Lisa Rosenthal — it began looking for alternate locations. Lansco convinced the retailer that it should move to Fifth Avenue below 48th Street, where Cushman & Wakefield reported that in the first quarter ground-floor rents on average were about $595 per foot, compared to $2,067 per square foot north of that

dividing line. Fast-fashion stores like Zara (at 500 Fifth Avenue) and H&M (at 505 Fifth Avenue), both on 42nd Street, had moved in over the past few years. Store executives liked 530 Fifth Avenue, which Moinian bought in 2004, but the space, which was spread over the ground ﬂoor, the lower level and mezzanine level, was only 22,000 square feet, according to marketing materials from Moinian’s brokerage, Winick Realty Group. That was 13,000 square feet shy of the 35,000

Patients and patience

A health-care seller holds together a four-year-long deal despite economic roller coaster BY ADAM PINCUS hile scores of developers, partners and lenders took each other to court during the downturn — and tried to squeeze each other for more money — one Manhattan buyer and seller managed to keep the peace despite the economic roller coaster ride. The deal involved 607 Hudson Street, a highly coveted spot at the corner of 12th Street in the West Village. The site, which was occupied by the non-proﬁt VillageCare’s nursing home, went into contract in 2007. It didn’t close for almost four full years, but the deal emerged from the downturn with only minor scrapes. Real estate insiders said the four-year contract was the longest purchase agreement in a straightforward real estate transaction they could recall.

42 July 2011 www.TheRealDeal.com

Ira Nesenoff, the managing partner with law ﬁrm Nesenoff & Miltenberg, said in his 26 years in the business, he could not recall a straightforward contract that took longer than about six months to close — other than those drawn out by litigation or by design. Those longer contracts are sometimes needed because of a requirement to deliver a property vacant, obtain a zoning change or get approval from a judge on a sale. “[But] absent exigent circumstances, four years in contract? I want to say that is almost a record,” he said. The long saga started in 2006 — at the peak of the market, when recently developed condo conver-

FLANk Management is now converting 607 Hudson Street into apartments.

square feet Syms wanted. The available space did have 45 feet of Fifth Avenue frontage. The adjacent corner spot in the building was (and continues to be) leased to a JPMorgan Chase bank branch. To the north of Chase was the available space, which had a mezzanine level. And to the north of that, on the second floor, was the office. The problem was that the mezzanine and the second-floor office didn’t connect. “[The 22,000 square feet] was what we were given, but we said this isn’t big enough. What can we connect to make this usable for our clients?” said Rosenthal, a director at Lansco. Also, Lansco agents were soon told that there was an interested office tenant for the second-floor spot, and a lease deal was imminent. Moinian’s agents — Lori Shabtai and Darrell Rubens — realized that they could hold on to Syms and get better terms for that space, so they hastened to call the office deal off. Still, to make it work for Syms, the mezzanine had to be connected to the second-floor space. That required serious construction, including the demolition of several bathrooms, and an extension of the mezzanine space further out into the store to get it to line up with the office. The price tag: more than $1 million. There was an 11th-hour deadlock over who would take on the construction job. (City property records show that Moinian agreed to spend $1.5 million.) Syms’ annual rent was not disclosed; however, the two parties signed the 35,000square-foot deal last August. Syms plans to move there in the fall. According to Lansco’s Dolch, the final contract ironically includes an option to lease a third-floor office space if it becomes available in the future — so the clothing store may soon be able to loosen its belt even further. TRD

sions nearby like 142 West 10th Street were selling (on a blended basis) for as much as $1,500 per square foot. VillageCare, which provides nursing home services in multiple locations in Manhattan, wanted to sell its Hudson Street site, which it had occupied since 1958. The proceeds would be used to ﬁnance and build a new, larger residential-care facility about 15 blocks south, at 214 West Houston Street. “We needed to know the value of the property, because we needed to invest that in the new place,” said Louis Ganim, vice president of communications at VillageCare. “When we looked at selling it, it was going up in value every time we turned around.” So, in 2006, executives at the nursing facility brought on James Nelson, a managing partner at Massey Knakal Realty Services, and listed the 48,100-square-foot, neoFederal building for $39 million. It didn’t take long to ﬁnd an interested buyer in condo developer FLANk ManageContinued on page 84

LANSCO AGENTS PHOTO BY CHRIS MARTIN; 607 HUDSON STREET PHOTO FROM PROPERTYSHARK.COM

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A ‘tender’offer

vicer CWCapital Asset Management, which deSL Green’s $258 million cashier’s check didn’t end clared the entire litigation at 3 Columbus, but it paved the way for a deal amount due. On Sept. 1, Related took control BY ADAM PINCUS of the note, and ate last year, an attorney for the next day its developer Joseph Moinian handed Manhattan’s County Clerk partner, German a cashier’s check in the stunning American Capital Corporation, amount of $258,550,838.52. It was filed to foreclose drawn from the bank account of SL Green Realty, Moinian’s part— a move Moininer at 3 Columbus Circle, and dean’s allies deemed livered as a show of good faith. The predatory. so-called tender offer was designed That’s about when SL Green, to short-circuit litigation among which is headthree heavyweight Manhattan office landlords. ed by CEO Marc But the tender — believed to be Holliday, stepped by far the largest ever deposited in, positioning itwith the Clerk’s office — failed in self as Moinian’s white knight. its immediate goal to end the nowfamous saga over the fate of 3 CoThe goal: pay off lumbus. Related’s attack The building, of course, was at dog, a division of the center of a battle between two Deutsche Bank, members of New York City’s real which was waging estate elite — the tower’s owner, a feisty court battle to take control Moinian, who had defaulted on his loans, and Stephen Ross, whose of the 768,565firm the Related Companies was square-foot office trying to wrest away control of the building, and take asset. a 49 percent share Moinian had bought 3 Colum- Top: 3 Columbus Circle. Bottom: SL Green’s cashier’s check in the stunning amount of of the building. $258,550,838.52. Right (top to bottom): landlord Joseph Moinian, SL Green’s Marc Holliday bus Circle in January 2000 and and Related Companies’ Stephen Ross. While SL then refinanced it in 2006 with a Green and Moinian ultimately prevailed, the uncertainty of $250 million mortgage that was later secu- companies later. ritized. He quickly began a comprehensive But the downturn hobbled the develop- Related’s foreclosure action made it difficult rehab of the property including re-cladding er. In January 2010 he missed a nearly $2 for SL Green to determine the property’s valit in glass and paying tenants to leave so he million payment and by March the loan was ue, the firm’s executives told The Real Deal could fill the building with higher-paying in default, and transferred to special ser- last month. One major cloud was whether

The (other) Brooklyn Flea A buyer’s vision makes a ‘handyman special’ townhouse an eventual steal BY CANDACE TAYLOR n the current market, home purchases — even at the lower end of the price spectrum — can be just as hairy as commercial real estate deals. Brooklyn native Margaret Cuonzo, for example, got a steal on her recent purchase of 50 Dufﬁeld Street, the three-family Downtown Brooklyn townhouse she is currently renovating. According to city records, she paid $705,000 — “basically, the price of a condo in one of the nicer buildings [in the area],” said Cuonzo, who teaches philosophy at the Brooklyn campus of Long Island University. But it took nearly a year of wrangling with banks to take possession of the house, despite the fact that Cuonzo is “more than qualiﬁed” to buy it, said Jacqui Howard Sicignano, a salesperson at the Corcoran Group who represented the seller.

“I was putting down a big down payment, and still I went through hell,” said Cuonzo, who is hoping to move in this November. Sicignano first listed the 4,200-square-foot house, between Tillary and Concord Streets, in the fall of 2009. The owner, an 82-year-old woman, had lived there since the 1960s, but when her husband died, “ﬁnancially, [she] couldn’t keep up the house anymore,” Sicignano said. Because the seller was Brooklyn native Margaret Cuonzo spent a year wrangling with strapped for cash and didn’t have banks to take possession of her townhouse at 50 Dufﬁeld Street money for staging or even a new in Downtown Brooklyn. coat of paint, Sicignano had to show the rapidly deteriorating property had — I really was relying on the location “as is.” and the price,” recalled Sicignano, who “I really had to work with what I priced the property at $750,000.

Related was owed a pre-payment penalty of $54 million because the loan didn’t mature until 2016. “There were a lot of outcomes that were not in our control, and a lot of timelines that could be anywhere from one month to two years,” said David Schonbraun, co-chief investment officer of SL Green. “[We stepped] into active litigation with uncertainty as to exactly how much money was going in and exactly when it was going in.” SL Green made the $258 million tender offer two days before Thanksgiving. (James Rossetti, deputy county clerk for New York County, said it may be the largest tender offer ever in Manhattan.) But Related, which was still in control of the loan and holding out for millions more, did not bite. Despite that, the tender offer played a crucial role, insiders said. In New York, if such an offer is not accepted within 10 days, interest on money owed from that day forward is forfeited unless a higher judgment is won at trial. “Once Ross allowed the 10 days to expire, he knew he would end up paying Deutsche [Bank] the interest on Moinian’s loan for the duration of the trial unless he won the prepayment issue,” Moinian’s attorney, Stephen Meister, a partner with law firm Meister Seelig and Fein, said. “That drove the settlement, which resolved the prepayment fee at pennies on the dollar.” By the end of January, the deal was completed. SL Green pledged $138 million in equity to recapitalize the deal and complete the $175 million building rehab. SL Green also arranged short-term financing to pay approximately $278 million to Related and German American Capital to retire Moinian’s $250 million defaulted loan. TRD

During the first open-house in October 2009, some 60 people arrived to find gaping holes in the walls, floors and ceilings. Urine-soaked newspapers blanketed the third floor, where the owner’s son lived with several pit bulls. During the open house, Sicignano confined the dogs to the garden, but every time a potential buyer walked by, “the pit bulls would start jumping up and down and growling,” recalled Cuonzo, who attended the open house after spotting the listing online. At that point, Cuonzo had been looking to buy real estate for about two years. Raised in Bath Beach at the borough’s southern tip, she’d purchased a one-bedroom co-op at the foot of the Brooklyn Bridge in 1998, and then sold it at 2007 — at the zenith of the boom. The profit from the sale eventually became the down payment for her purchase at 50 Duffield. Like most visitors at the open house that day, Cuonzo said she was appalled by the condition of the home. The bricks in front of the building had settled in an outward Continued on page 90

www.TheRealDeal.com July 2011 43

THIS MONTH IN

REAL ESTATE HISTORY The Real Deal looks back at some of New York’s biggest real estate stories

1961: FINAL PARCELS OF RHINELANDER ESTATE SOLD

he last pieces of the Rhinelander estate — which were amassed over more than 200 years and at one time had been one of New York’s great real estate fortunes — were sold 50 years ago this month for $9 million. Rhinelander Real Estate, led by board chairman Philip Rhinelander 2nd, signed a contract to sell 32 properties in Manhattan and Queens to a group of investors headed by developers Lawrence Wien and Harry Helmsley. At the time, the pair was on a buying spree. Indeed, one month later they announced they were negotiating to acquire the Empire State Building. The Rhinelander family, like the Astors, the Goelets and the Beekmans, had created a fortune buying properties in the 18th and 19th centuries. By 1908 the family’s portfolio was valued Harry Helmsley at $50 million. The family continued buying properties into the 20th century through Rhinelander Real Estate, which owned and managed the family’s assets. It began selling a number of buildings in the 1940s and 1950s, and the ﬁrm was dissolved in 1961. One of the properties the estate sold in the package was the Cammeyer Building at 650 Sixth Avenue, which in 2007 was converted to residential condos.

1931: FEDS CONFISCATE ILLEGAL DISTILLERY OPERATED BY TISHMAN

ederal agents seized, under Prohibition laws, a six-story industrial building, owned by Tishman Realty and Construction, 80 years ago this month. The $2 million building, located at 50 Sutton Place South, was being used as an illegal distillery. At the time it was the most expensive illegal alcohol production facility in the nation to be seized by agents. The operation, which used a garage as a front to mask its illicit activities, could produce up to 29,000 gallons of alcohol each day and net between $8 million and $10 million a year in proﬁts. U.S. Department of Justice special agents had raided it on May 22, 1931, and closed it down before the property seizure a few months later in July. Tishman Realty and Construction — at the time led by DaDavid Tishman vid Tishman and which was the predecessor to both Tishman Construction and Tishman Speyer Properties — took ownership of the building in 1929 and had $1.8 million in mortgages on it. There was no indication Tishman was ever charged with a crime. Under federal law, the government could take properties being used to make alcohol, citing the non-payment of taxes. But it was the ﬁrst time statutes under Prohibition — which went into effect in 1919 and were repealed in 1933 — had been used to seize property in Manhattan.

1900: BRONX APARTMENT OWNERS TAKEN

ON OVER FREE RENT

ronx brokers and property owners suffering under a glut of housing supply battled residential developers of small buildings who were fraudulently boosting the perceived value of their buildings with non-paying tenants, 111 years ago this month. Brokers and landlords called a meeting that month to try and halt builders from filling newly constructed, three-story apartment buildings with tenants who were allowed to live for months for no charge. The underhanded tactic gave building buyers and brokers an incorrect belief there was a strong rent roll, when in fact the residents would leave once they had to start paying rent. “Fake tenants give us more trouble than anything else in the business,” real estate broker John Borgstede told the New York Three-story Bronx “frame” building Times that year. “Although a house may be filled with tenants, a buyer cannot tell whether or not every floor will be vacant the following month.” Development was spurred in the southern portion of the Bronx near Manhattan at the turn of the century by builders rushing to construct three-story, non-brick “frame” buildings generally below 152nd Street. Builders filed a slew of permits around that time because under a new fire code that took effect in 1899, frame buildings were to be banned in that area, raising the cost of construction. Compiled by Adam Pincus

44 July 2011 www.TheRealDeal.com

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NEW DEVELOPMENT

Azure sees signs of life

A tragic crane collapse behind it, the UES cond-op begins turnaround, but still faces challenges BY SARABETH SANDERS However, a spokesperson for HSBC deAzure may have been able to shed the part with its land, the developers instead luxury apartment building tower- nied the rumor that it would be willing to memory of the construction accident, and inked a 75-year ground lease, meaning the ing 34 boxy stories above low-rise sell, adding that the bank continues to issue it may even overcome the challenges of its building would not be a condominium but Yorkville shops, Azure has always mortgages to individual buyers in the build- ground lease in the coming months. But as rather a cond-op — a co-op with condo been nondescript by design, and yet theat- ing. And several additional lenders are now for fading into the background as just an- bylaws. rically imposing in reality. financing purchases in the building, thanks other nice, family building — it seems that In order to construct the Azure, the develwas just never in the cards. Launched in 2007, the project was to the renegotiation of the ground lease, opers first had to emerge as the winner in a aimed at Manhattan’s growing population which also lowered the effective carrying competitive bidding process handled by the of families. Marketing materials empha- costs for buyers. Ground-lease stigma city’s Educational Construction Fund, which Douglas MacLaury, a senior vice pres- Mattone and DeMatteis are both family- trades unused air rights for classrooms in an sized child-oriented neighborhood amenities and focused on the customizable, ident at the Mattone Group, Azure’s co- run firms rooted in the outer boroughs. attempt to alleviate overcrowding in schools. three-, four- and five-bedroom units on developer alongside the DeMatteis Or- Mattone, a Queens-based development and It was the first of what was expected to be a offer. Azure was not meant to excite com- ganization, said Azure is in the midst of construction company, operates properties new wave of projects conceived by the fund, ment; however, time and again, it has failed. In May 2008, five months after Azure’s initial sales launch, a 200-foot crane collapsed at the site of the project, killing two construction workers, forcing a temporary shutdown of then-agent Nancy Packes’ marketing efforts, and sealing the building’s fate as headline fodder in the still ongoing legal saga that followed. (Crane owner James Lomma is currently awaiting trial on manslaughter charges after a judge turned down his bid to have the case dismissed.) Then the real estate market tanked. At the time of the crane accident, Azure could boast 17 of its 128 units in contract, but two years later, that number had shrunk to just nine, suggesting that some buyers had backed out of their contracts. Fast-forward to today. The From left to right: David Greczek and Ammanda Espinal, on-site sales agents for Azure; Karen Mansour, executive vice president of sales and marketing at Prudential Douglas Elliman; crane accident is now a distant John Caiazzo, vice president of the DeMatteis Organization; and Doug MacLaury, senior vice president of the Mattone Group (standing). Right: Azure at 333 East 91st Street. memory, and the building is beginning to overcome some of its challengwhich hadn’t been active since the 1980s. es. During the downturn, its ground-lease At the time, the market for new conownership structure became its Achilles’ struction was hot, and if anything, buyers heel, turning off more than a few buyers, were more concerned about noise from the brokers and attorneys and making financschool than about the potential pitfalls of a ground lease. ing difficult for those buyers willing to take Then came the crane collapse. The acthe risk. The lease has, however, since been renegotiated, but the new sales team is still a sales turnaround. As of last month, 25 like Jamaica Center, a shopping center and cident delayed construction and bestowed working to shed the building’s stigma — no units had closed at the building (though two movie theatre. DeMatteis, with offices on a stigma upon the building just as the real easy task. of those were purchased by Douglas Mat- Long Island and in New Jersey, is one of the estate bubble was coming to an end. By the “We highly dissuade anyone from buying tone, one of the developers, and his wife, city’s largest school builders. time the accident began fading from memin this building,” said attorney Adam Leit- who plan to use the combination spread as The partners broke ground on Azure ory, the market was frozen solid. Then, as man Bailey, owner of an eponymous Man- a pied-à-terre). MacLaury said he expects — named for the blue sky reflected by the it began to thaw, the ground lease emerged hattan-based law firm, noting the ground 41 additional units to close by December, building’s glass skin — in September 2007, as a major roadblock to sales. lease and the small fraction of units sold. which would bring the building to roughly and kicked off sales one month later. Because Azure residents must pay to “Who is going to pay for the light bulbs if 50 percent sold. The building was constructed at 333 help cover the annual ground rent, the the sponsor goes under?” he asked. But just when things started looking up East 91st Street atop city-owned land, using building’s maintenance fees are noticeably Sources also said that investors are now for Azure, a court last month cleared the $8.4 million worth of air rights the develop- higher than at comparable new construcangling to purchase the property’s $145 way for the reopening of a massive waste ers were allowed to purchase in exchange tion buildings. Units are priced lower than other conmillion mortgage, currently held by HSBC transfer station just two blocks away from for building a public middle school next and four other lenders. the building. door. Because the city very rarely agrees to dos in order to offset the maintenance fees:

“We knew of those issues back in 2007, 2008, but there were different market conditions [then]. Everything was selling.” Douglas MacLaury, the Mattone Group

46 July 2011 www.TheRealDeal.com

PHOTOGRAPH OF GROUP FOR THE REAL DEAL BY CHRIS MARTIN

NEW DEVELOPMENT Azure’s units have thus far sold at an average of $933 per square foot, according to data from StreetEasy. By comparison, Yorkville’s Georgica and Brompton condos, launched around the same time as Azure, have respectively sold for $1,270 and $1,557 per square foot, though they also have ostensibly more desirable locations. Still, Azure’s land lease left unit owners vulnerable to skyrocketing monthly charges after 75 years, because it did not give the building the option to either renew the lease or purchase the land below. That meant the city could theoretically hike up the rent significantly at the lease’s expiration. The developers had tried to negotiate better terms from the get-go, but at the time, the city wouldn’t budge, and it wasn’t perceived as a necessity in order to sell the building. “We knew of those issues back in 2007, 2008, but there were different market conditions [then],” MacLaury said. “Everything was selling.” Once the recession hit, however, the land lease became a major impediment to sales. “In a bad market, where people look for excuses to write off potential properties, that is an excuse,” said Bruce Cholst, a partner at the law firm Rosen Livingston & Cholst, who is not involved in any cases at Azure. The building’s far-from-the-subway location — on the corner of 91st Street and First Avenue — didn’t help matters either. “The location is tough,” said one broker who previously marketed the building. “If it [were] 30 blocks south and a condo, it would sell in three months, easily.” (Ironically, the one thing even Azure’s detractors don’t dispute is that the building — which initially gained notoriety because of the crane collapse — is actually constructed remarkably well.) Meanwhile, Azure’s owners have not been willing to slash prices, unlike most other buildings on the market during the downturn. MacLaury said that asking prices, which currently begin at $805,000 for a low-floor one-bedroom, and reach $5.69 million for a four-bedroom penthouse, have not changed “materially” since the building was declared effective by the Attorney General’s office in early 2010. A source with knowledge of the building said that at one point, the developers even turned down an offer from a buyer who wanted the entire building for $700 per square foot. With sales being handled by Prudential Douglas Elliman’s Ilan Bracha (now of Keller Williams), the building crossed over the requisite 15 percent-sold mark re-

quired for closings to begin. However, that sales uptick was partly due to a bulk deal of roughly 20 units that later fell apart, according to brokers with knowledge of the building. (MacLaury contends that this is a “misinterpretation” of what occurred.)

Gaining traction By the spring of 2010, with Azure still languishing on the market, it became clear that something needed to change. Mattone and DeMatteis went back to the city to ask for reconsideration of the land lease, and this time, they were successful. Last summer, the developers paid the

tax deductible, and can be higher or lower depending on the floor. By contrast, data from appraisal firm Miller Samuel shows that carrying costs in Manhattan condos in 2010 averaged $1.44 per square foot. The restructuring of the lease appears to have produced something of a breakthrough for mortgage lending in the building. Last month, the developers announced that JPMorgan Chase and Wells Fargo had joined HSBC in giving the building their stamps of approval, signing on to finance loans for buyers at up to 80 percent of the loan-to-value. Craig Rojek, a mortgage broker at San

“A lot of the brokers were shying away from even showing [apartments at Azure].” Jacky Teplitzky, Prudential Douglas Elliman

Ammanda Espinal, a former Bracha Group member, and Elliman’s Jacky Teplitzky team, which recently took over a handful of the building’s higher-priced listings. In May, Teplitzky lured some 85 brokers to Azure for margaritas, Mexican food and a seminar on ground leases co-hosted by attorney and ground-lease specialist Lior Aldad of Aldad & Associates, who has represented at least 10 of Azure’s buyers. Teplitzky said many brokers have avoided bringing clients to the building because they’re spooked by the land lease. The aim of the event, she said, was to reverse that stigma by educating the community. “A lot of the brokers were shying away from even showing [apartments at Azure],” she said. “If they cannot understand the concept [of a ground lease], they cannot sell it to their own clients.” Also to encourage sales, the developers have picked up the tab for closing costs usually covered by buyers, Aldad said. MacLaury said buyers’ incentives are given on “a case-by-case basis,” though concessions are “diminishing” as the building ﬁlls up and as the Upper East Side’s supply of large, residential units dwindles.

New transfer station

Top: The 2008 crane collapse. Bottom: The Asphalt Green athletic complex in Yorkville. Left, top: James Lomma; left, bottom: The waste transfer station two blocks from Azure and adjacent to Asphalt Green.

city $500,000 for the option to purchase the land when the lease expires, and were granted an option to extend the lease for another 25 years should Azure’s board choose not to buy it. They also negotiated an additional tax beneﬁt from the city that effectively extends the building’s 421a tax abatement to 20 years, rather than the typical 10, which brings Azure’s carrying costs closer to those at other buildings. Costs now average around $1.60 per square foot per month, according to real estate website StreetEasy, are 45 percent

Diego-based CalCon Mutual Mortgage, which also recently began lending in the building, said Azure seems to be “picking up a ton of traction” and that he’s received a number of calls within the last month from buyers looking to ﬁnance their purchases there. Azure’s sales team has also been working to change the industry’s knee-jerk reaction to buildings on leased land, trumpeting the idea that not all ground leases are created equal. The building is now being marketed by

Just as the building is getting back on its feet, though, it looks like there may be another dose of Azure-related drama coming down the road. The city plans to fast-track the $125.4 million plan for the waste station, so that it will be fully operational by 2014. The new facility would handle 5,280 tons of trash per day, 24 hours a day, six days a week, and has prompted a rash of protests from Yorkville residents, who expressed concern about the health hazards of opening a garbage facility in a densely packed residential neighborhood. In addition, residents argue that the transfer station is too close to the neighborhood’s beloved Asphalt Green athletic complex, on York Avenue between 90th and 91st streets. Azure’s proximity to Asphalt Green has also been a major selling point for the building. MacLaury said that while the Mattone Group has “had a dialogue” with the City Council about the project, they’re not planning to join their neighbors in signing a recent petition against the project that has amassed thousands of signatures. The developers feel the facility’s “location is sufﬁciently far away” from the building so as not to have an impact on sales or property values, he said. But a similar debate recently raged in Hudson Square, where the Sanitation Department is moving forward with a new garage and salt shed within earshot of several pricey new condos. Buyers in those buildings, including a number of celebrities, joined with neighborhood groups in protests and lawsuits but Continued on page 90

www.TheRealDeal.com July 2011 47

Private practice

Private equity firms and developers increasingly join forces to up ante on real estate investments

By Candace Taylor ouble-dip fears notwithstanding, the real estate industry is seeing a resurgence of private equity investment. But this time around, firms who got burned during the financial crisis are taking a different tack. Instead of doing deals on a one-off basis, with a different developer on each deal, a growing number of private equity funds are forming exclusive agreements with experienced developers through new, independent real estate operating companies in New York City and elsewhere. In an environment where many see enormous potential for growth, these investments give private equity players a leg up on the competition, and a chance to share in higher profits (known as the “promote”) if the project succeeds. Deals structured in this way are not new; in 2003, for example, the now-defunct developer Clarett Group and Prudential Real Estate Investors formed Clarett Capital LLC, a real estate development company. But more and more private equity firms are now investing at the general-partner level, according to Manhattan attorney Steven Koppel, a partner at Jones Day who focuses on real estate private equity. “I’ve seen more and more of it in the last year,” Koppel said. “I’m currently handling four such deals.”

For developers — especially those whose reputations survived the downturn — the partnerships offer a fresh start after several bruising years. For private equity firms, they save time and offer reassurance in a difficult market. “This is a different age, a different era that we’re in,” said Daniel Alpert, a managing partner at the Manhattan-based real estate investment bank Westwood

ingly common over the past 15 years, most invested in real estate as limited partners, Koppel explained. Often, that meant contributing as much as 90 or 95 percent of the equity in the deal, while the developer — or general partner — put in the rest. Then, once the project began to make money and both the limited and general partners had gotten their investment back, the developer would receive a “promoted

“Private equity funds saw that they were leaving money on the table, because the operating partner was getting this disproportionate return on its investment.” Steven Koppel, Jones Day Capital. “You need not only people who can bring you a deal, but also quality operators, people who can go out and do successful transactions with you. Because of that mentality, he added, “it makes sense for a lot of private equity funds and other investors to turn to exclusive arrangements [with developers].”

Investing in the G.P. The current uptick in general-partner investing stems from today’s unique market conditions. As private equity firms became increas-

Private equity as limited partner Developer = General Partner

Private Equity = Limited Partner

interest,” or increasingly larger share of the proceeds, often up to 50 percent, despite a comparatively small initial investment. The promote is seen as a type of reward to the developer for his sweat equity and an incentive to strive for higher returns. But in recent years, “private equity funds saw that they were leaving money on the table, because the operating partner was getting this disproportionate return on its investment,” Koppel said. That is now beginning to change. “What some private equity funds have been doing is, rather than being a limited

partner on a project-by-project basis, they are joining forces with [that developer] and investing at the general partner level,” said Koppel. The two entities then form a new operating company, which in turn seeks limited partner capital for its projects. A prime example is Berkshire Realty Ventures, an offshoot of 40-year-old Boston real estate company the Berkshire Group. A little over a year ago, Berkshire hired Larry Ellman, Citi Property Investors’ former head of North American investments, to start Manhattan-based BRV. The venture is “focused on investing in the operating companies themselves, as opposed to buying the assets,” Ellman told The Real Deal. For example, BRV partnered with Chicago-based hotel company Lodging Capital Partners in late 2010. The two formed a new company, LCP Berkshire, which plans to invest $500 million to $1 billion in hotels over the next two years — as well as seeking limited-partner capital — to acquire properties priced between $20 million and $50 million, Ellman said. In March, the new entity paid $35.5 million to buy the underperforming 447room Hilton Rye Town in Westchester from Ashford Hospitality. A large private equity fund is the capital partner in the deal, Ellman said. The plan is to renovate the hotel — which has had several different owners over the past decade — and regain lost market share. Founded in 2005, Lodging Capital Partners has since purchased over $4 billion worth of real estate, including the Drake Hotel in Chicago, the Four Seasons Austin, and the Snake River Lodge & Spa in Jackson Hole, Wyo. As the hard-hit hotel industry Continued on page 86

Private equity becomes general partner Developer + Private Equity = General Partner

Private Equity Investor = Limited Partner

1 Developer and private equity are two separate entities. The developer puts up, say, 5 to 10 percent of the equity, while private equity puts up 90 to 95 percent.

3 Finally, with its equity and debt secured, the LLC invests in or buys a property.

48 July 2011 www.TheRealDeal.com

LLC

2 The two then form an LLC and, with their joint equity, get a loan from a bank or another lender.

1 Developer and private equity join forces to create a new company. Both are now considered “the general partner.”

4 Finally, with equity and debt secured, they invest in or buy a property.

LLC 2 The “general partner” finds a new private equity investor.

LLC

3 With equity in hand, they form a second LLC and get a loan from a bank or another lender.

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Appraisers still down for the count Insiders see permanent shift in size of industry and type of work it’s doing BY TRACEY SAMUELSON ppraisers — even compared to other real estate professionals — took a severe beating during the real estate downturn. And while the housing market just might be coming off the ropes to fight another round, the appraisal industry is still down on the mat. In fact, some professionals worry the shrinking industry may be in for even more dire straits ahead, thanks to new types of mortgage fraud (see sidebar) and new regulations. “The sad thing is that there are many good appraisers who simply can’t afford to do business anymore,” said Jonathan Miller, CEO of appraisal firm Miller Samuel. It’s now widely known that the housing crisis revealed systematic failures within the appraisal industry: Toocozy relationships between brokers and banks habitually pushed appraisers to render higher-than-market appraisals. But legislation aimed at restoring the independence of appraisers only created new problems, leading some appraisers in New York City and elsewhere to deliver below-market estimates of properties’ value. Now, those who have worked in the industry for years say it has been permanently altered. Not only has the number of people working in the appraisal industry in Manhattan declined in the last few years, but those who remain have drastically shifted the kind of work they are doing. There are currently only 332 appraisal industry professionals in Manhattan —including certified and licensed appraisers and appraisal assistants — down 26 percent from the peak of 447 in 2007, according to the New York Department of State. Meanwhile, more regulations are on the horizon, and many in the industry say these new rules are unlikely to help. In fact, some are concerned that the new regulations could strip appraisers of the value they bring to the table.

Now, “there’s continued pressure on appraisers, mostly residential, to turn out work quickly and more cheaply than ever,” said Wilkes.

Reeling from reform One such reform is the Uniform Appraisal Dataset, which is set to take effect on Sept. 1. The UAD will standardize the forms appraisers use for mortgages submitted to Fannie Mae and Freddie Mac, requiring all appraisals to contain identical information fields and superseding any local forms and standards. Despite good intentions, the new forms could have an unintended side effect — removing any data that doesn’t fit into the standard boxes. This could strip appraisals of the more narrative, descriptive information appraisers collect dur50 July 2011 www.TheRealDeal.com

New sources of revenue

ing their property evaluations, explained David Wilkes, a New York-based partner of the law firm Huff Wilkes and a trustee of the Appraisal Foundation in Washington, D.C. This could further erode the quality of work and devalue the profession Miller already worries has become “an army of form-fillers.” “It’s creating a solution to appraisal quality that’s at the wrong end of the problem,” said Miller. “They’re trying to commoditize a profession.” The UAD comes on the heels of previous legislation that many insiders have perceived as detrimental to the residential appraisal industry, such as the federal Home Valuation Code of Conduct. Passed in 2008, HVCC was intended to prevent lenders and third parties from influencing appraisals — it essentially prohibited stakeholders in a deal from selecting appraisers. (It was replaced by the Appraiser Independence Requirements in October 2010. AIP is considered the functional equivalent of HVCC, but with some clarifications of the requirements.) The end result of these two regulations was that many banks turned to appraisal management companies for their residential and, to a lesser extent, commercial appraisal assignments. Such

clearinghouses now drive a tremendous amount of residential appraisal business. But they’ve also turned appraisals into a volume business, slashed fees for appraisers and, according to some, driven appraisers into markets outside their expertise.

In response to these challenges, some appraisers have quit after finding that they simply can’t make it work financially anymore. Other residential and commercial appraisers are increasingly working outside the scope of their traditional core business in order to survive financially. Miller has found new clients outside mortgage lenders. He estimates 75 percent of his previous business came from retail banks. But in 2006 and 2007, he made a decision to shift the core of his business away from those banks. “I reversed our business model,” Miller said. “The takeaway was finding clients who actually want valuation services, instead of just forms filled out with numbers on them.” Now, banks drive only 25 percent of Miller Samuel’s business, but they are private banks focused on wealth management and portfolio evaluations. The majority of Miller’s work is now in the legal field, including litigation support, court testimony, trusts and estates, bankruptcy and divorce. Other common clients are co-op boards and condo associations. Meanwhile, Steve Schleider, a commercial appraiser and president of Metropolitan Valuation Services in Manhattan, is building a niche as an expert in assessing environmental claims, as green initiatives and mandates become more of an underwriting issue than they were Continued on page 88

‘House-ﬂopping’ on the rise Pressure to undervalue properties leads to new kind of fraud

ppraisers who have weathered the last few years are now feeling a new type of pressure. In the past, appraisers often felt compelled to submit higher-than-market appraisals to convince borrowers that properties were worth their hefty asking prices, and keep the mortgage pipeline primed with deals. Now, however, they are facing the opposite pressure. Tight credit markets and gun-shy lenders mean appraisers are often pushed to be conservative with their valuations and come in below market. “Whereas before the crash there was house-flipping, there’s now house-flopping,” said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School of Business. So-called “flopping” means “under-appraising a property for a quick sale for the profit of those who are in the deal and have inside information,” she explained. Essentially, low appraisals enable a below-market sale, which then allows the buyer to quickly resell the property at a higher price and pocket the proceeds. Whether the appraiser is in on the fraud or is simply pressured into a low valuation, the end result is the same. House-flopping can be especially problematic when short-sales are involved. What should be a reasonable way out for underwater homeowners becomes prohibitively complicated when banks are unable to trust the appraiser to establish a property’s current value. Suspicious banks simply don’t agree to short sales. One-third of all loans investigated in 2010 included some type of fraud relating to the appraisals or valuations, according to a new report by the LexisNexis Mortgage Asset Research Institute, which aggregates and analyses public data. That’s up from 23 percent in 2007. New York is especially bad, with 38 percent of loans originated in the state containing some form of appraisal misrepresentation. Only Florida is worse. By Tracey Samuelson

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TOP AGENTS

Brooklyn’s best

A ﬁrst-ever ranking of the borough’s brokers, including the ‘data nerds,’ the former stay-at-home moms, and the one-time Manhattan-only agents

BY CANDACE TAYLOR he business of selling Brooklyn real estate has changed drastically in recent years. When Brooklyn native Karen Heyman first started selling Dumbo lofts in the 1990s, Manhattan residents refused to take the subway there. “I used to have to send my driver over the bridge to pick people up,” recalled Heyman, now a senior vice president at Sotheby’s International Realty. Today, “those same people are now on their third or fourth Dumbo apartment.” Brooklyn brokers have seen their business (and wallets) expand exponentially over the past decade, as a trickle, and then a flood, of resettling Manhattanites ventured across the East River. In particular, agents have benefited hugely from the condo boom of the mid2000s, which greatly upped Brooklyn sales prices (downturn notwithstanding). For example, the priciest listing currently on the market in Brooklyn is a $23.5 million triplex penthouse in the ClockTower Building, a former cardboard factory converted to condos by developer David Walentas; a penthouse at Richard Meier-designed On Prospect Park is priced at $5.1 million.

Meanwhile, large Manhattan brokerages have infiltrated a borough once dominated by small mom-and-pop firms. Despite these changes, there’s still little reliable data about Brooklyn’s real estate companies, or their salespeople. Last year, Brooklyn’s last two remaining multiple listing services — the Brooklyn New York MLS and the smaller Brooklyn MLS — officially merged. The new system, known as the Brooklyn New York MLS, has a membership of nearly 3,000 agents. But large Manhattan firms like the Corcoran Group and Prudential Douglas Elliman do not participate, because they belong to the larger, Manhattan-based Real Estate Board of New York. Despite the scarcity of reliable information, The Real Deal has decided to go where no publication has gone before: a ranking of Brooklyn’s top real estate brokers. Just as in Manhattan, data about Brooklyn brokers’ closed sales is not publicly available. Instead, TRD looked at which brokers were marketing the most property at press time, with the help of the real estate listings database On-Line Residential. Using this information, we compiled a list of the 25 residential brokers who are currently selling the most Brooklyn real estate. Below is a glimpse at the top 10.

their listing at 299 West 12th Street recently sold to actress Jennifer Aniston (though Heyman said she can’t comment on that deal).

No. 2: Mordechai Werde and Michael Ettelson, Prudential Douglas Elliman

Alan and Karen Heyman at 70 Willow Street in Brooklyn Heights, where writer Truman Capote once lived.

No. 1: Karen Heyman and Alan Heyman, Sotheby’s International Realty This brother-sister team is marketing some 19 Brooklyn properties worth nearly $60 million, including several multi-million dollar apartments at the ClockTower. Yet it’s somewhat ironic that the duo is the borough’s top-ranked team, since Sotheby’s doesn’t have a Brooklyn office. Instead, the Heymans — who grew up in Brooklyn — work out of the firm’s 379 West Broadway office in Manhattan, though about 70 percent of their deals are done in Brooklyn. The reason, Karen Heyman explained, is that when she started selling real estate in 1993, the Brooklyn market was far less pricey. So despite her Brooklyn roots, she 52 July 2011 www.TheRealDeal.com

worked in Manhattan. Then one day, she was representing the seller of a loft in Hell’s Kitchen with stunning views of the Hudson River. The only way he would sell, she recalled, was if she found him a new apartment with a comparable view. She’d heard about a new condo known as the ClockTower opening in the then-rough neighborhood of Dumbo, so she took her client there. “We walked around the neighborhood — well, there was no neighborhood — but he thought it was totally cool,” she said. She ended up selling him the apartment, and another one in the ClockTower, the ﬁrst day sales at the building ofﬁcially started. Heyman’s Brooklyn business “blossomed after that,” she said. In 2004, her brother Alan joined her in the business, and four years lat-

er, they sold the 14th-ﬂoor penthouse at the ClockTower for $7 million, setting a record for Brooklyn’s most expensive condo sale. Currently, they’re also marketing the borough’s most expensive townhouse: 70 Wil-

Mordechai “Mordy” Werde and Michael Ettelson got their start in new developments working for developer Shaya Boymelgreen, who built more than 2,400 apartments in Brooklyn and Manhattan during the boom. “We did most of [Boymelgreen’s] sales in Brooklyn,” recalled Ettelson, who said he and Werde are partners who share all of their listings. That helped them get work on other new projects. “It deﬁnitely gets your foot in the door for meetings with other developers,” Ettelson said. Of course, the Boymelgreen association could have the opposite effect now that his real estate empire is in tatters amid some 30 lawsuits ﬁled against him. But the duo says their relationship with the embattled developer hasn’t hurt them. “I don’t know too many developers who [didn’t] have problems” during the downturn, Ettelson noted. Besides, he added, “there were a lot of other brokers repping his deals.”

“I felt like I had discovered some piece of heaven. I immediately moved to Brooklyn Heights.” Cheryl Nielsen-Saaf, Corcoran low Street, the ﬁve-story Greek Revival in Brooklyn Heights where Truman Capote once lived. The 9,000-square-foot house is on the market for $15.9 million, or more than $1,700 per square foot. Of course, the Heymans still make time for some Manhattan business. For example,

Currently, Werde and Ettelson, who both live in Crown Heights, have listings for more than 50 Brooklyn homes worth nearly $43 million. That includes the 250-unit condo conversion BellTel Lofts in Downtown Brooklyn. The duo took over the project a year ago from Manhattan super-broker

PHOTOGRAPH OF THE HEYMANS FOR THE REAL DEAL BY MAX DWORKIN

TO P A G E N T S

Top Brooklyn brokers by listing volume COMPANY

# OF LISTINGS : APT. / TOWNHOUSE LISTING DOLLAR VOLUME NOTES

RANK

BROKER/BROKERS

Karen Heyman and Alan Heyman

Sotheby’s International Realty

$58,946,000

Listings include an $8.2 million condo at One Main Street (the ClockTower).

Mordechai Werde and Michael Ettelson

Prudential Douglas Elliman

$42,981,300

New development projects include BellTel Lofts at 365 Bridge Street.

Albert Wilk

Wilk Real Estate

$35,407,200

New development projects include the Breakers at 3112/3144 Emmons Avenue and Bay Breeze at 3165/3163 Emmons Avenue.

Leslie Marshall and James Cornell

Corcoran

$30,564,965

Cheryl Nielsen-Saaf

Corcoran

$29,890,000

New development projects include Third + Bond, Cobble Hill Towers and 443 Hicks Street. New development projects include On Prospect Park at One Grand Army Plaza.

Frank Castelluccio and Aaron Lem- Corcoran ma, the CastLe Group

$27,821,630

New development projects include 75 Clinton Street.

Joyce Kafati-Batarse, the Kafati-Batarse Group

Prudential Douglas Elliman

$24,415,000

New development projects include 500 Fourth Avenue.

Jessica Buchman

Corcoran

$23,653,000

New development projects include Harbor Hill Condominium.

Michele Kleier, Sabrina Kleier Mor- Gumley Haft Kleier genstern, Samantha Kleier Forbes

$23,500,000

Only one Brooklyn listing: a $23.5 million penthouse at the ClockTower.

Deborah Rieders

Corcoran

$23,056,000

New development projects include the C-560 condo.

Jessica Peters and Stephanie O’Brien

Prudential Douglas Elliman

$22,423,000

New development projects include 524 Manhattan Avenue in Greenpoint.

Andrew Booth

Corcoran

$20,983,400

New development projects include 523 Court Street.

Edmund Sadio

Century 21 Achievers

$19,332,900

New development projects include 108 Kenilworth Place in Flatbush.

Peter Noonan

Brown Harris Stevens

$18,740,000

Listings include 428 6th Street in Park Slope for $2.55 million.

Patricia Neinast, Kelly Neinast, Kristin Neinast, The Neinast Team

Corcoran

$18,320,999

Listings include 1015 Eighth Avenue, #1, in Park Slope for $1.25 million.

Billy Apter

RE/MAX At the Slope

$16,072,996

Listings include 1546 Bay Ridge Parkway in Dyker Heights for $949,000.

Thia O’Dell

Aguayo and Huebener Realty

$15,134,000

New development projects include Collection Aptartments at 904 Paciﬁc Street.

Libby Ryan

Brown Harris Stevens

$14,624,000

Listings include 9 Prospect Park West, #15B, for $3.5 million.

Ellen Newman

Corcoran

$13,639,000

Listings include a townhouse at 44 Monroe Place in Brooklyn Heights for $4.99 million.

Anthony Mussolino

Ben Bay Realty Company

$13,519,000

Listings include 723 58th Street for $999,000.

Charles Fabbella

Ben Bay Realty Company

$13,259,000

Listings include 257 82nd Street for $1.8 million.

Tessie Salavantis

House-N-Key

$13,080,000

Listings include 147 85th Street for $3.5 million.

Michael Brooks

MNS

$13,008,000

New development projects include 139 Skillman Avenue.

Brian Lehner

Brown Harris Stevens

$12,749,000

Listings include 29 Grace Court in Brooklyn Heights for $5.95 million.

Source note: On-Line Residential Inc. (OLR.com). Includes active Brooklyn residential sales listings (apartments and single and multi-family homes with no commercial/retail component) as of the ﬁrst week of June 2011. Listings that did not also appear on the ﬁrm’s website were not included. Known teams or partnerships are counted as a single entity. On-site agents who work exclusively for a developer have not been counted.

Ilan Bracha. Developer JJ Bistricer of Clipper Equity said at the time that the project needed a Brooklyn-based team of agents. BellTel is now just over 60 percent sold, Ettelson said, with another 30 units rented out. The team is also marketing 33-unit 109 Gold Street in Vinegar Hill, and has at least three new Brooklyn developments set to hit the market in the next year.

No. 3: Albert Wilk, Wilk Real Estate Albert Wilk, the founder of Wilk Real Estate, arrived in Midwood, Brooklyn, from Israel in the 1980s, when he was 22. Three years later, the Russian-born Wilk (pronounced ‘Vilk’) had started selling real estate for Fillmore, the borough’s largest brokerage. By 1987, he’d opened his own company. Today, Wilk Real Estate, based at 626 Avenue U, has 30 agents and roughly $80 million worth of listings, many of them in Canarsie, Gravesend, Sheepshead Bay, Bensonhurst, Brighton Beach and Coney Island. Wilk himself is the listing broker on nearly 60 of those properties, he said,

though his agents help with showings. His claim to fame is that “in Brooklyn, I can look at any apartment, any house, and within $20,000 I can tell you for how much it’s going to sell,” he said. His company also works in Staten Island, but doesn’t specialize in that market. In fact, Wilk opened a Staten Island ofﬁce during the real estate boom, but closed it around a year ago. “It didn’t work out,” he said.

No. 4: Leslie Marshall and James Cornell, the Corcoran Group Leslie Marshall wasn’t always a real estate broker. Now a senior vice president at James Cornell and Leslie Marshall Corcoran, she started out as a criminal defense attorney. But after 10 years of working at the Legal Aid Society, she decided to make a career

change. She took a job at Brooklyn Landmark Realty, which later merged with the Corcoran Group. Now, “I’m doing what I love,” said Marshall, who with partner James Cornell is marketing more than 45 Brooklyn homes worth $30.6 million. Cornell, meanwhile, is a longtime industry veteran who worked for two decades at the venerable Park Slope ﬁrm Warren Lewis Realty before joining Corcoran. The two decided to team up around ﬁve years ago, after doing a few deals together. “We sensed that we worked the same way,” Marshall said. Marshall and Cornell handle all kinds of properties, from a 5,800-square-foot townhouse at 69 Willow Street in Brooklyn Heights, priced at $5.75 million, to the 44-unit Carroll Gardens condo conversion Third + Bond. “Wherever the business takes us, we go,” Marshall said.

No. 5: Cheryl Nielsen-Saaf, the Corcoran Group Real estate is “in my blood,” said Cheryl

Nielsen-Saaf, a senior vice president in Corcoran’s Brooklyn Heights ofﬁce. In her native Chicago, her grandfather was a developer, her mother an interior designer, and her father the head of a construction company. So when NielsenSaaf moved to New York City after college, selling real estate felt “natural,” she said. At first, she focused on the Upper West Side. Then, one snowy day, she went to Cheryl Nielsen-Saaf look at an apartment in Brooklyn Heights, and immediately decided to move there. “I felt like I had discovered some piece of heaven,” she recalled. That was 26 years ago; she’s been selling Brooklyn real estate ever since. Currently, she has 15 Brooklyn listings worth nearly $30 million, but she is best known as the broker heading up the sales team Continued on page 88

www.TheRealDeal.com July 2011 53

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ecoming successful in real estate is not easy. Not only does it take a stomach for risk, it also takes the ability to bounce back from failed projects — as many are trying to do now. But once real estate executives achieve a certain level of success, they often seem to branch out to other areas of business. For a while, the preferred next area seemed to be banking. Then, it was professional baseball and football teams. Now, all bets are off — or should we say on? — as a rush of real estate moguls get into horse racing and gaming, with the properties associated with these activities available at discounts. The list of real estate bigwigs who went the banking route have included Howard Milstein (Emigrant Savings Bank), the late Stanley Stahl (Apple Bank for Savings), Moshe Marx (Berkshire Bank), Stephen Rosenberg (Greystone Bank), Shaya Boymelgreen (LibertyPointe Bank) and David Lichtenstein (Park Avenue Bank). The latter two banks were taken over by the FDIC last year. Meanwhile, in 2009, Stephen Ross, chairman of the Related Companies, and two other top executives at the firm — Jeffrey Blau and Bruce Beal —created a financial firm, SJB National Bank, to buy failed banks. That same year, the LeFrak family invested in Florida-based Bank United and then in Metro Bank in London the following year. Over the last decade, a number of successful real estate leaders have also been investing in their hobbies — which include big moneymakers like baseball and football. Fred Wilpon, head of real estate investment firm Sterling Equities Associates (and more recently, a Madoff victim), is the principal owner of the New York Mets. In February 2008, Related’s Ross famously purchased 50 percent of the Miami Dolphins football team, its venue Dolphin Stadium and the surrounding land from Wayne Huizenga for $550 million. A year later, he completed his purchase of 95 percent of the franchise for $1 billion. Meanwhile, Bruce Ratner is the minority owner of the New Jersey Nets, after heading up an ownership group that paid $300 million in 2004. (The Ratner coalition beat out a similar offer by another real estate mogul, Charles Kushner, and former New Jersey Governor Jon Corzine.) And, the Wilf family of Garden Homes — headquartered in New Jersey and one of the largest homebuilders in the nation — bought the Minnesota Vikings for $600 million in 2005. Lately, though, it seems that the investment area of choice is horse racing and gaming. With consumers cutting back on spending during the recession, “destination” resort sites like Las Vegas and Atlantic City

“got hammered in the past couple of years,” explained New York Gaming Association President James Featherstonhaugh. That opened up opportunities for investors to scoop up real estate in those locations on the cheap. Last year, for example, Starwood Capital, headed by longtime hotel industry executive Barry Sternlicht, acquired a substantial piece of bankrupt Las Vegas casino operator Riviera Holdings Corp. through a reorganization plan. “Most people think [Starwood] did that because they wanted an entry into that market at a reasonable price,” Featherstonhaugh said. In New York, developer Morris Bailey (who heads up both JEMB Realty Corp. in the United States and Busac Real Estate in Canada) teamed up with Dennis Gomes, a former Atlantic City gaming executive, to get a piece of the action. The two spent only a bargain-basement price of $35 million to acquire the Resorts Casino in Atlantic City, a huge drop from the $140 million paid by Colony Capital for the property the last time it sold, in 2001. In June of this year, Bailey, a long-time owner of thoroughbred horses, also took over Monmouth Park in Long Branch, N.J., as well as the off-track wagering facility in Woodbridge, N.J. He also has licenses to build four additional off-track wagering facilities. Meanwhile, Jeffrey Gural — chairman of Newmark Knight Frank and a principal owner of Newmark Holdings (which owns and manages office and loft buildings in New York) — has spent close to six months negotiating to take over the operations of the Meadowlands Racetrack in East Rutherford, N.J. Currently the owner of Tioga Downs and Vernon Downs racetracks in upstate New York, both of which have slot machines that supplement horse racing profits, Gural is expected to step in at the Meadowlands in September. Gural’s partners are also involved in gaming. Newmark CEO Barry Gosin and company president James Kuhn purchased the Bethlehem Steel site in Bethlehem, Pa., in 2004 through their entity KG Urban Enterprises. They negotiated a joint venture with Las Vegas Sands for a gaming license, converted the facility, and in 2009 the Sands Bethworks Casino opened for business. While it may look easy to become successful in a new field, it takes hard work, tenacity and chutzpah to grow in these other businesses and to thrive in real estate simultaneously. In other words, they’re not just playing a hunch. Additional reporting by Candace Taylor

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PROFILE

Colliers’ crusade

Canadian money has been stoking growth at the firm, but it still has a ways to go to catch up to competitors BY ADAM PIORE ark Jaccom is trying to poach brokers from rival firms, and he seems to want everybody to know it. Sitting at the head of a large conference table in the Madison Avenue headquarters of Colliers International Tri-State last month, Jaccom held up a two-page spread imprinted with a baseball diamond, and smiled. Next to each base were the corporate logos of firms like CBRE, Cushman & Wakefield and Newmark. Next to each logo: a name. “If they’re on first base, we’re starting to talk,” said Jaccom, the pugnacious, 55year-old CEO of Colliers’ Tri-State operations. “At second, they’re really interested. And at third base, we’re in contract. I have 20 contracts out. And I’m talking to another 30.” These are busy times at Colliers TriState’s offices, which Jaccom and his corporate partners in Toronto have vowed to grow along with the rest of the international firm into a powerhouse that can compete with the biggest industry players. Jaccom is already touting his outfit as top tier — as he has been from virtually the moment it sold a majority interest to FirstService Corp., the $2 billion Torontobased, publicly traded real estate services firm, back in 2008 on the very day that Lehman Brothers went bust. “In the past, sometimes we’d have to scrape and scratch to get a chance to make our case” for a deal, he said. “Today, we compete head-on. We’re invited to the dance for every major presentation.” It’s a boast that some local industry insiders dismiss outright as bluster. “Everyone is a good sales person, but it’s a little bit of a stretch” to compare them to CBRE, Jones Lang LaSalle or Cushman, said an executive at one of the big firms. “I think they’re Williams Real Estate with a new name.” Said another: “Anybody can talk about aspirations. And really, to date, that’s all I have heard from those guys.” In terms of local leasing activity, that still appears to be true. Colliers’ officials declined to provide a breakdown of their Manhattan leasing activity, but said their leasing totals in the Tri-State area rose to 10.5 million square feet in 2010, up from 8.9 million square feet in 2008. That’s about a 10 percent increase — not bad for a recession, but still far below that of its top competitors. Meanwhile, figures from CoStar and

58 July 2011 www.TheRealDeal.com

the firms themselves show that as of last month, Colliers had 1.8 million square feet of listings in Midtown, Midtown South and Downtown Manhattan, compared to 6.7 million for Cushman and 11.2 million for CBRE. Of the top 50 office leases in Manhattan last year, Colliers did five, including a nearly 200,000-square-foot lease at One Broadway for law firm Kenyon & Kenyon,

they’re still a relatively small player. However, there’s little doubt that Jaccom’s firm is growing — and growing fast. When Jaccom joined what was then GVA Williams in 2006, originally to head its tenant representation division, the firm had three offices in Connecticut, New Jersey and Manhattan, with about 70 brokers. Today, under the Colliers umbrella, it has 109 brokers in its Tri-State division,

Properties Group); and Peter Kozel (Newmark’s former chief economist). That’s likely just the start. In two years, when the ﬁrm’s lease is up at its current 50,000-square-foot headquarters on 380 Madison Avenue, Jaccom hopes to move and double the space. Of course, the door swings both ways when it comes to poaching. Late last month, Cushman announced that it had hired away

Mark Jaccom, the company’s CEO, says he has 20 contracts out to new brokers and is “talking t a

“In the past, sometimes we’d have to scrape and scratch to get a chance to make our case [for a deal]. Today, we compete head-on. We’re invited to the dance for every major presentation.”

Harry Blair as a senior director and Sean Kearns as director. According to news reports, the two were the leasing agents on a number of high-proﬁle buildings, including 500 Fifth Avenue and 126 East 56th Street.

Mark Jaccom, Colliers International Tri-State

Much of the ambitious expansion plan Colliers Tri-State has been pursuing has been made possible by the sale of a 65 percent stake in GVA Williams to FirstService. Indeed, FirstService has been sinking hundreds of millions of dollars into acquiring firms worldwide and transforming the loose conglomeration of Colliers franchisees from Australia to Latin America into a cohesive corporate unit. FirstService began the roll-up effort in 2004, when it acquired its first stake in a Colliers franchise — Colliers Macaulay Nicholls International, the largest Colliers affiliate. It’s been growing the percentage it owns in the Colliers name ever since, acquiring franchises outright and, when nec-

where it repped the landlord, and a roughly 195,000-square-foot lease at 304 East 45th Street for the United Nations Development Programme, where it repped the tenant, according to CoStar numbers, as reported by Crain’s New York. CBRE did 23 of the top 50 deals, Cushman did 17, Newmark did 10 deals, and Studley and Jones Lang LaSalle each did six. As for building sales, Colliers closed 50 transactions in the Tri-State area in 2010, up from 23 in 2008, according to stats provided by the company, which declined to provide dollar amounts. In the sales arena, too, most agree

and plans to hire at least 30 more. Jaccom said he’s also built a 35-person consulting shop to provide background to his teams, and has beefed up project management, appraisal and evaluation services, as well as the capital markets group. Among his new hires: James Emden, Alan Desino and Vince Tuminelli (a former CBRE executive vice president, and two senior vice presidents, respectively); Andrew Simon (a former executive managing director at NAI Global’s New York City ofﬁce); Jeffrey Oram (a capital markets broker who directed Marcus & Millichap’s National Ofﬁce & Industrial

A new partner

PHOTOGRAPH FOR THE REAL DEAL BY MAX DWORKIN

PROFILE essary, buying non-afﬁliated shops like GVA Williams to expand its reach. The old Colliers “was an international franchise, but the way it was run was more discombobulated than anything else,” explained Frederic Bastien, an analyst at Raymond James Ltd., who follows the company. “You had established afﬁliates that only focused on their own mar-

“FirstService has been able to implement a lot of their mindset and mentality and have the entire organization roll in the same direction,” Bastien said. “To say that they are on par with JLL and Richard Ellis wouldn’t be a fair assessment, but they have deﬁnitely made some signiﬁcant headway in the last several years. There is huge potential.”

ﬁrm had “outgrown” Colliers International. A source claimed that FirstService had tried to “bully” the partnership into joining the new Colliers International, but that they refused. Because Cassidy Turley still had rights to the Colliers name when FirstService’s deal with GVA Williams was complete, GVA was temporarily rebranded as Williams

The ﬁrm’s new hires (from left to right): James Emden, Alan Desino, Andrew Simon and Jeffrey Oram.

Company executives: Robert Freedman, chairman; Andrew Roos, vice chairman and principal.

“To say that they are on par with JLL and Richard Ellis wouldn’t be a fair assessment, but they have deﬁnitely made some signiﬁcant headway in the last several years. There is huge potential.” Frederic Bastien, Raymond James Ltd.

Colliers did ﬁve of the top 50 Manhattan leases last year, including a roughly 195,000-square-foot lease at 304 East 45th Street (left) and a nearly 200,000square-foot deal at One Broadway (right).

ket. It was owned by a bunch of different guys who really had no incentive to work together to make this ﬁrm a better and competitive player.” In 2010, however, FirstService’s ownership stake in the company’s franchises reached a tipping point. At 70 percent, they gained control of the Colliers board, rebranded the company, and set stricter requirements for dealing with issues like referrals and fees (among other things).

FirstService’s activities in New York City have caused confusion among local brokers as the rebranding campaign led to the removal of the Colliers moniker from what used to be known as Colliers ABR. When Colliers ABR severed its ties with the Colliers brand, it merged with several other former Colliers afﬁliates, and rechristened itself as Cassidy Turley. At the time, Cassidy Turley chairman Mark Boisi told The Real Deal that his

Real Estate, a FirstService Company. But in March 2010, Williams assumed its new name: Colliers Tri-State International. When asked how much capital FirstService had provided Colliers Tri-State to expand since then, Jaccom responded: “I can’t give you that. But I will tell you it’s a lot of money — a lot of money.”

The blueprint For GVA, merging with an international

player was part of a plan that had been in the works for some time. Jaccom was vice chairman and principal at Studley when GVA’s Robert Freedman called him in the summer of 2006 with an intriguing business proposition. Michael T. Cohen, president and CEO, along with Andrew Roos, executive vice president, had decided to step back from day-to-day operations. Would Jaccom be interested in jumping to GVA Williams and helping Freedman transform the company? The goal, Jaccom said, was to build up the brokerage, and then look for partners who could help take it global — an increasing imperative in a business that had been transformed in recent years by the worldwide expansions of CBRE, JLL and Cushman. When Jaccom arrived at GVA, the first order of business, he said, was “to get rid of bad blood.” He fired 10 brokers he determined were either “bullies,” “negative,” or “resistant to change.” Jaccom visualized a firm where brokers would feel comfortable “leaving their doors open,” collaborating on deals, and where backbiting wouldn’t be tolerated, he said. So, he and Freedman began building a consulting team that included a chief economist, researchers, graphic designers and lawyers. In all, they hired 30 consultants as part of a plan to provide even their most junior brokers with “backbone and resources to secure clients.” To win a big account to represent Colgate, Jaccom said, his consultants analyzed new potential office sites and provided area wage contours, zip code analysis, crime statistics and even traffic studies. Williams won the deal, but in the end Colgate didn’t move. Instead, GVA Williams helped it restructure and renew a 530,000-square-foot lease at its 300 Park Avenue headquarters. In 2007, Jaccom started hiring brokers, and GVA’s stable quickly grew from 70 to 85. But the firm was “still David in Goliath’s world,” Jaccom noted, and he and Freedman were eager to find a partner that could give it a global reach. “We looked at what Insignia did with CB Richard Ellis. I saw what Jones Lang LaSalle did, how they grew; Cushman with their Italian backers,” Jaccom said. “We were a regional player. But if I had a client with offices all over the world, I couldn’t service them outside my own backyard, so I was losing them.” By the time FirstService came calling, GVA was already deep in negotiations with another firm, the British company DTZ. But that changed when Freedman and Jaccom flew up to Toronto to meet with FirstService CEO Jay Hennick, a protégé of management guru Peter Drucker. Hennick laid out the firm’s vision. FirstService had been acquiring Colliers offices around the world and then snapping up Continued on page 90

www.TheRealDeal.com July 2011 59

ARCHITECTURE REVIEW

James Gardner

Waiting for the Whitney

Location is key, but renderings of new museum show awkward — rather than daring — design from Renzo Piano

ll museums, like buildings in gen- gentrification that the Whitney wants to door café will spread out under the shadow vation lab and a restaurant operated (as alof the High Line to the east, while the ter- ways, it would seem) by Shake Shack guru eral, have a real estate dimension. be there. race to the west will look over the Hudson, Danny Meyer. Perhaps the museum could have stayed From the simple act of purchasing the lot on which the museum will rise to the on the Upper East Side. It certainly tried to with spectacular views that museum offiOn the basis of the somewhat insufficient structure’s interaction with the buildings make a go of the Breuer building for more cials describe in the same terms in which a renderings, the design for the new Whitney that surround it, a museum is part of the than a generation after its inadequacies be- developer might describe a condominium. appears to be pale and extensively glazed urban fabric. As such, it bespeaks the at- came clear. But thanks to the injudicious, All of which is by way of saying that, almost over. It exemplifies the industrial aesthetic titudes and acquisitiveness of the citizens not to mention meddlesome, interference as important as the response to the form that has informed Piano since the Centre whom it serves. of the Landmarks Preservation Committee, of the building, is the public’s yearning re- Pompidou, but that has become far more But the new $680 million Whitney Mu- as well as the reflexive and unreflecting response to its enviable location. refined and effective in recent years. seum building, which broke ground on M sistance of many UpThe building, which promises to be three Museum officials have called the project 26 on Gansevoort Street between West and per East Siders, all times larger than the Marcel Breuer mono- “sculptural” and that seems to be a good deWashington streets along the High Line, hopes of expansion lith, will include an 18,000-square-foot gal- scription. The problem is that Piano is not seems more intimately and also more insiswere crushed, first lery for special exhibitions, making it the really a sculptor among architects, as Frank tently in touch with this real estate element Gehry and Rem Koolhaas Like many New Yorkers, the Whitney than perhaps is true of any other museum are. Rather he is a draftsis a packrat who has simply run out of closet man: In his more recent to date. The Whitney — which this year celpractice he has conceived space — its collections, which comprised ebrates its 80th anniversary — is some 2,000 works in 1966, have now grown his buildings in terms of moving from the granite citadel that fairly simple, even classical to more than 19,000 pieces. Marcel Breuer designed on Madivolumes that have been enson Avenue and 75th Street, a Brulivened by interesting surtalist building that it has inhabited face treatments both in visince 1966. sual and tactile terms. A rendering of the new Whitney Museum, which broke There are a number of reasons That is to say that he ground in the Meatpacking District in May and is set for completion in 2015. Inset: Architect Renzo Piano. for the museum’s move. For most conceives his buildings more in two dimensions of the time that it’s been on the Upthan in the three dimenper East Side, (and surely since the sions that are the natural mid-1980s), the Whitney has desprovince of sculpture. A perately wanted to expand. Like many New Yorkers, the Whitney is perfect example is the New York Times Building, coma packrat who has simply run out of pleted in 2007. Structuralcloset space — its collections, which ly, it is as sheer and simple comprised some 2,000 works in 1966, have now grown to more than as the Seagram Building, 19,000. (The Metropolitan Museum though its surface has been of Art has finalized a deal to lease the evocatively corrugated alBreuer building to house its modern most along its entire height and contemporary art collections and it has a few spindly, Gothic ornaments on the once the Whitney moves out.) More than anything, however, top. What it’s lacking is any there is an unquantifiable, almost sense of inventive volume, metaphysical sense of “location, loand that’s precisely the cation, location” that drew the Whitquality that the new buildney to its new home in the Meatpacking on Gansevoort Street ing District. Back in 1966, New York’s art when a Michael Graves-designed expan- largest column-free museum gallery in the seeks to supply. Based on the renderings (it might work world was limited to 57th Street and Madi- sion did not fly in 1985, and again in the city, according to a news release. In addition, there will be two floors for better on completion) it’s sundry asymmeson Avenue. Now, the action is mainly cen- past decade, when a Renzo Piano-designed tered in Chelsea, within walking distance expansion failed. displaying the permanent collection, thus tries merely look awkward, rather than darThe Landmarks Preservation Commit- transforming the museum from what it is ing, as the structure juts out unexpectedly of where the new Whitney — scheduled for tee’s requirement that the Whitney jump today — primarily a receptacle for mounting both in the front and the back. It seems quite completion in 2015 — will rise. Renzo Piano, the architect responsible through hoops to preserve a few thoroughly transient shows — to a backward-looking clear that the complex functionality of the for the new building, practically invented worthless brownstones denied the museum stage for the exhibition of older art. The top building — as well as the demands of real gentrification-through-museums when, in any chance to create an important architec- floor will contain a space for contemporary estate — have turned Piano in directions 1977, he and Richard Rogers designed the tural statement that would have enhanced artists’ projects; between it and the perma- where he’s less sure of himself. nent collection space they will represent an If, as suggested, the new Whitney intiCentre Pompidou in the 4th arrondisse- the streetscape of the Upper East Side. mately reflects the values of the real estate Real estate considerations, obviously, additional 32,000 square feet. ment of Paris, a project that injected new life into one of the more depressed sections have influenced the shape and design of ofMeanwhile, as has been indicated, market, it will also, of course, have a proalong Gansevoort Street a cantilevered found effect upon them. The new develfi ce towers and residential developments for of the city. This time, however, the tables are turned: The Whitney is going to arrive generations in New York City. But the new entrance will cover an 8,500-square-foot opments along the High Line are already in the Meatpacking District long after gen- Whitney may be the first museum in which outdoor plaza directly in front of the High seeing their values rise. When the Whitney these values have been integral to the de- Line. Other features are a black-box theater, opens among them in four short years, the trification has taken hold there. Indeed, it’s precisely because of that sign. According to the renderings, the out- a 170-seat auditorium, a library, a conser- asking prices will increase further. TRD 60 July 2011 www.TheRealDeal.com

Double or nothing ‘Caravanning’ makes comeback for

brokers selling in tricky market

Cooper, Robertson & Partners

BY KATHERINE CLARKE n a warm Saturday last month, apartment-seekers who followed signs for an open house at 915 President Street in Park Slope were surprised to find not one, but two units for sale in the building. The listing agents, Prudential Douglas Elliman’s Immacolata Giocoli and Joseph Baglio of the Brooklyn firm Madison Estates, had teamed up to market the two airy studios on the first floor of the prewar co-op, which are each priced at around $250,000. They directed visitors to each other’s listings, and pointed out that the apartments can be combined. At first, it may seem counterintuitive for rival brokers — who are, after all, competing for the same pool of buyers — to work together in this way. But Baglio said he views the co-open house as “doubleexposure” for his listings. “We are definitely making more deals this way,” he added. This kind of teamwork is called “caravanning,” according to MLB Kaye International Realty associate broker Fern Kamins, and it’s been making a comeback. The idea behind caravanning is that brokers from different firms join forces to market their inventory to clients looking for similar properties in the same neighborhoods. It ranges from casual situations, like double open houses, to organized tours featuring up to seven or eight properties in the same area. The tours often feature lunch or dinner options, and even themes: Brokers said one 2010 open house tour even required participants to dress up for Halloween. Caravanning, big in the 1980s and 1990s as a result of huge co-op inventory, went out of fashion during the housing bubble of the mid-2000s, when brokers didn’t need much help selling properties. Some even kept their listings as private as possible, hoping for a direct sale, brokers said. Since the downturn, however, the practice has been revived, with brokers increasingly warming up to co-brokering in hopes of getting the most exposure possible for their listings. It can also serve as a helpful strategy for properties that have been hanging around on the market for a while — as many in today’s market have. “It’s cyclical,” said Kamins, who often opts to include her listings in caravan tours. “It goes with the market. When the market is bad, everybody wants everybody else to see their listings.”

Architecture, Interiors, Urban Design

Vickey Barron, a managing director at the brokerage Core, said she regularly organizes tours by seeking out apartments similar to her own listings, then reaching out to other brokers to get their cooperation. Her recent projects have included tours of West Village townhouses and two-bedroom prewar apartments in Carnegie Hill. The practice “should have never died,” said Barron, who added that she sees many more sales through caravanning than through traditional open houses.

Photo: Peter Murdock

“[Caravanning] should never have died.”

212.247.1717 www.cooperrobertson.com

62 July 2011 www.TheRealDeal.com

Vickey Barron, Core

Vickey Barron at her 38 Bethune Street listing during a recent tour of West Village townhouses

Convenience for brokers is another advantage of caravanning. Diane Saatchi, a senior vice president at Hamptons brokerage Saunders and Associates, said she organized a 36-property tour of modern Hamptons houses last month to help brokers familiarize themselves with the many homes on the market. “Ever since everything went online, the region that we work in seems to have grown,” Saatchi said. “In the old days, we would just cover East Hampton; now you need to be aware of what’s on the market more generally.” Dan Tubb, director of sales at Corcoran Sunshine Marketing Group, organizes open-house tours a few times a year. One recent tour involved Battery Park City properties, such as Riverhouse at Two River Terrace and One Rector Park at 333 Rector Street. “I think the game in the last ﬁve years has deﬁnitely been to embrace the brokerage community across the board,” Tubb observed. “It does not improve sales to hold anything back.” Sellers are also pushing for more openness about inventory in the market, Kamins said, putting pressure on their brokers to get the most possible exposure for their property. With so few buyers out there, she observed, sellers get extremely anxious. If the property doesn’t sell, she said, “who are they going to blame but the brokers?” TRD PHOTOGRAPH FOR THE REAL DEAL BY CHRIS MARTIN

Q&A

Upper West has upper hand H&H may be gone, but brokers say it’s not a sign of the times for the neighborhood — at least for most properties BY MELISSA DEHNCKE-MCGILL

he legendary Upper West Side institution H&H Bagels may have unexpectedly shuttered last month, leaving residents without piping hot sesames and poppies, but don’t take that as a sign of the times for the rest of the neighborhood. Residential real estate in the area seems to be rebounding stronger than many of its counterpart neighborhoods in Manhattan, at least for desirable properties. In this month’s Q&A, brokers who specialize on the Upper West Side told The Real Deal that business, while not quite back to normal, has vastly improved over the last year, especially for new luxury rentals and large family-sized apartments. There are pockets of weakness and slow-moving properties — anything evenly remotely perceived as overpriced, anything in need of renovation and anything small (inventory for studios and one-bedrooms is high). Indeed, one broker said that he’s seen studios and one-bedrooms that were selling for $600,000 at the height of the market, now listed in the high-$300,000-tolow-$400,000 range. So there are deals to be had.

Donna Olshan

president, Olshan Realty, Inc. How is the residential market doing on the Upper West Side these days and how does that compare to three months ago, six months ago and a year ago? The market is doing better overall. I’m not sure if it’s doing better than three months ago, but it’s doing better than six months ago and certainly better than a year ago. Both the average and median sales prices were down for Manhattan in the ﬁrst quarter, compared to both the previous quarter and year over year. Are you seeing the same for residential sales prices on the Upper West Side? Prices are up on the Upper West Side. I can’t speak to the exact numbers, but you can’t really look at the fourth quarter of 2010 and the ﬁrst quarter of 2011 because … [there was an] anticipation of the capital gains tax going up. Capital gains did not go up. So there were things going on that had to do with people anticipating a change in the law, which didn’t happen. Which units are doing best on the Upper West Side right now? High-end rentals are doing great, period, end of story. [Also], I have 11 contracts signed on townhouse properties asking $4 million and above on the Upper West Side since Jan. 1. I think that’s a solid showing. 64 July 2011 www.TheRealDeal.com

Rick Wohlfarth

founder and president, Wohlfarth & Associates How is the residential market doing on the Upper West Side these days? It’s very strong. We have an acute housing problem here: not enough condos and prewar apartments to meet the relative demand. We recently put a [Classic] 7 on the market at 79th Street. It was asking $3.3 million — we had 40 people the ﬁrst week. We ended up having three offers, and it went above the asking price. I’m seeing that Uptown also. At 890 West End Avenue [at 104th Street] we put a Classic 5 on the market that was in estate condition; it was bid up to $1.07 million, and there were six or seven other offers. What are inventory and prices like on the Upper West Side right now? There is not enough product for anything that is two-, three- or four-bedrooms and up. For the one-bedroom and studio market there’s an awful lot of product available, and we are ﬁnding that things that used to sell at the height of the market for $600,000 you can get for somewhere in the high $300,000s to low $400,000s. As it compares to three months ago, I think prices are up. We do not have any new product and nothing relatively new coming on the marketplace, such as new developments. There are a bunch of buildings that are slated to be converted from a rental to condo, but it is simply not going to meet the demand. So this will end up putting some pressure on prices [for larger apartments]. Which price ranges and unit types are struggling the most on the Upper West Side right now?

But inventory is tight for large, luxury units in both new rental and new condo buildings. So as those units have been coming on the market, they’ve been gobbled up quickly. A case in point is the Laureate on West 76th Street and Broadway, which has made headlines recently for its quick sales. Another broker said that there is less “nay-saying and lowballing” than there was a year ago and that the $2.5 million to $4 million segment of the market has been particularly strong lately. “If a property is unique and well priced, it can still command more than it did pre-Lehman. But if something is priced as though nothing bad happened between 2008 and 2009, it won’t sell,” she said. Still, others said they are starting to see the summer doldrums set in and that while things were “on fire” a few months ago on the Upper West Side, they have since cooled off a little. For more on which sections of the Upper West Side are faring best and worst, which projects are hottest, and which property types are struggling most, we turn to our panel of experts. There is a part of the one-bedroom market that is doing relatively well that might see $1 million to $1.5 million, but those are very special and unique — high floors, close to the park, panoramic views. [But] the other part of the [one-bedroom] market, for instance, 588 West End Avenue in the high 80s, I used to sell some of the one-bedrooms in the $600,000s. Now if you go on StreetEasy, there are listings [for the same apartments] at $410,000 and $380,000. I have not seen one-bedrooms reduced to these prices in years. I am trying to see if I can find contiguous one-bedrooms or a one-bedroom and a studio, but it’s not so easy. The Real Deal and others have reported that the Laureate on 76th and Broadway has seen strong sales, but what’s the most interesting new condo coming online soon? There is nothing coming online. There are no shovels in the ground. Part of the problem is that the city is not giving the 421a

Rushmore and 535 West End Avenue. I think there are still a lot of celebrities that want to live at 101 West 79th Street, the Park Belvedere.

Dexter Guerreri

founder and president, Vandenberg Inc., the Townhouse Experts How is the residential market doing on the Upper West Side these days, and how does that compare to three months ago, six months ago and a year ago? We only do townhouses. Currently we have about $50 million worth of townhouse listings [including those that have been divided into multiple apartments]. In a normal year we would have 55 listings and 55 closings. Last year there were 48 [listings] on the Upper West Side, so it was almost normal. So far this year, the

“A constant lament is that there’s nothing to sell, which isn’t quite true. There’s plenty to sell, but very little of it is truly top notch.” Jeffrey Stockwell, Stribling and Associates extension to developers. … I am representing two or three investment groups that are trying to buy residential buildings in Manhattan to convert to condos, and it is not easy. But there are a few that are in the pipeline that are being converted. Some of it could be 18 months out. Which are the hottest celebrity buildings? Of course, 15 Central Park West, the

number of listings is almost normal, but the number of closings is down. What are you seeing in terms of sales prices on your Upper West Side townhouses and how do the prices you’re seeing in the neighborhood compare to the recent past? In 2009, we dipped to $4.9 million in our average [sales] price. Our average price last year for West Side townhouses was

Q&A slightly over $5 million. So far this year, we are at at least $5.2 million. It’s hard to know based on this portion of the year how it will shake out. There seem to be a number of things going into contract right now. So the next quarter could prove that we are catching back up to normal. Which price ranges and unit types are struggling the most on the Upper West Side right now? The higher end has not sold as well for the last year — $10 million and up has not had as many sales as we would have expected. I am hearing about some high-end apartment sales around the city; I’m waiting for that to happen with the townhouses. How long are properties staying on the market on the Upper West Side, and how does that compare to a year ago? The ones below $10 million are staying on for [about] ﬁve and a half months, the ones above $10 million are at 17 months. … There are fewer buyers for the higher end.

Lisa Lippman

senior vice president/director, Brown Harris Stevens What are you seeing in terms of sales prices on the Upper West Side? The UWS is so much in demand, and by its nature has so little inventory that we have seen things really picking up. A year ago, the summer of 2010, was good, but it seems busier now and there is less nay-saying and lowballing. The fall of 2010 was great for the $6 million to $10 million market, and this spring has been amazing for the $2.5 million to $4 million market. It should be noted how little inventory there is on Central Park West in the four-bedroom market under $10 million. There are very few three-bedrooms, too.

it won’t sell. Also, triple-mint homes are selling the best. Pre-Lehman, more people were intrigued by wrecks.

Greg Kammerer

senior vice president, Corcoran Group How are prices in the neighborhood holding up these days? It depends on the size and type of apartment. Threeand four-bedroom co-ops and condos are in high demand and commanding the highest prices I’ve seen since 2007. They are the sales leaders, as well as two-bedroom condos. Which price ranges and unit types are struggling the most on the Upper West Side right now? Studio and one-bedroom co-ops with high maintenance are slow movers. They need to be in move-in condition and well priced in order to sell. Is there one telling statistic that shows where the market is at on the Upper West Side? The Laureate on Broadway and 76th Street is over 50 percent sold in three months at prices exceeding $2,000 per square foot. These are record-breaking prices for a Broadway building. In the broadest terms the Upper West Side stretches from 59th Street to 116th Street. Which areas within that region are doing best and worst in this market? Seventy-Second Street to 110th Street are doing the best. And, 57th to 66th streets, close to the highway, have slower-moving inventory. That should change with the advent of Riverside Center — the last Extell buildings to be built on Riverside Boulevard between 59th and 61st streets.

“If a property is unique and well priced, it can still command more than it did pre-Lehman. But if something is priced as though nothing bad happened between 2008 and 2009, it won’t sell.” Lisa Lippman, Brown Harris Stevens Which price ranges and unit types are struggling the most on the Upper West Side right now? Anything that is overpriced — anything. The market is much more reasonable than it was pre-Lehman. People analyze everything a lot more, which doesn’t mean that things don’t sometimes still sell for more than they did in 2005-2007. If a property is unique and well priced, it can still command more than it did pre-Lehman. But if something is priced as though nothing bad happened between 2008 and 2009

What are the most surprising trends you’re seeing on the Upper West Side right now? That the high-end rental market is so strong, and the arrival of big box stores like T.J.Maxx, HomeGoods, Michaels Stores and Whole Foods, which have found their way to 97th to 100th streets.

Jon Charnas

vice president, Fox Residential Group How is the residential market doing on

the Upper West Side these days? I think we’ve hit the traditional summer sales doldrums. I wish I could convince customers that they should buy now before interest rates begin to creep up. Perhaps the riotous Middle East and the weak members of the EU, to say nothing of our own serious joblessness, are affecting buyers. Earlier this year I sensed more eagerness to buy. Renters do not seem to be as affected as buyers, and New York businesses seem to be hiring at a much greater rate than last year, so rents are rising in response to demand. Which areas within the Upper West Side are doing best and worst in this market? Prices are high from the 80s down, so I ﬁnd price-conscious customers more interested in rentals and purchases in the 90s and up. Are you seeing a change in who is interested in buying and renting on the Upper West Side? Who are the most active buyers and renters in the market right now? I have many inquiries about pieds-à-terre and parents buying for children. I encounter few all-cash buyers at prices below $600,000.

Jeffrey Stockwell

senior vice president, Stribling and Associates How is the residential market doing on the Upper West Side these days? Demand is strong on the Upper West Side, especially for three- and fourbedroom apartments. Many families are choosing to stay in Manhattan over moving out to the suburbs. Twenty-five years ago many people felt the West Side was too rough and dangerous. Now I hear from many younger and single clients that it’s too suburban for them. How are prices holding up on the Upper West Side? [I’m seeing] that prices are essentially flat for studio, one-bedroom and two-bedroom apartments, but that they’ve risen for larger apartments. Some sellers have seen these stronger prices, however, and have gotten way too aggressive in pricing large apartments. Yes, the market has stabilized, but if something sold for $2.5 million 18 months ago, I don’t think the same apartment one floor higher can now sell for $3.5 million. Which price ranges and unit types are struggling the most on the Upper West Side right now? Studios and one-bedrooms. I find that most of my younger clients are choosing to buy their first home in Brooklyn rather than in Manhattan. This hurts areas like

the Upper West Side, Yorkville and Murray Hill, where many young people used to purchase their ﬁrst home. Those ﬁrst-time buyers who are committed to Manhattan are often heading north to Harlem. Which are doing better on the Upper West Side: high-end rentals like the Corner at 200 West 72nd Street — or highend condos? Both segments are doing very well, but if you were to offer me a high-end rental project or a high-end condo project, I’d probably choose to market the rentals. With the general economic instability … there are many buyers who would rather hang onto their cash. They have the mentality that cash under the mattress is the best place to be. So they are opting for rentals even if they are expensive. Which areas within the Upper West Side are doing best and worst in this market? Many of my buyers still resist Riverside Boulevard because of the lack of shops and the distance from the subway. That area needs more retail. People like buzz. The area around the Laureate and Harrison is not the most elegant on the West Side, but several of the young families I’m working with want to be there because it’s between the two West Side subway lines and close to all of the shops and restaurants. They will choose Amsterdam Avenue over West End Avenue and Riverside Drive. This is a choice very few people would have made 10 years ago. What is inventory like on the Upper West Side, and how does that compare to the recent past? A constant lament is that there’s nothing to sell, which isn’t quite true. There’s plenty to sell, but very little of it is truly top notch.

Ron Lense

executive vice president, Prudential Douglas Elliman How is the residential market doing on the Upper West Side these days? Right now I would classify the market as normal. Three months ago, the market was on ﬁre. Studios, one bedrooms, two-bedrooms and three-bedrooms were selling out fast and furiously. We put about 20 apartments in contract in that last three-month period. … [Before that,] we had experienced a slowness to the market, and we found there wasn’t a lot that we could do with the buyers [coming]. These $2 million-and-under buyers were showing up in decent numbers to open houses and responding to our marketing, but a large amount of them had a wait-and-see attitude. TRD www.TheRealDeal.com July 2011 65

TRI-STATE BRIEFS NEW JERSEY

Garden State housing prices see slide Home prices across the country are the lowest they’ve been in ﬁve years. And New Jersey is no different. While prices performed slightly better in the Garden State than they did nationally, they were down 24.2 percent for single-family homes in northern and central New Jersey in March from their peak in 2006 and down 3.4 percent compared to a year ago, according

to the Star-Ledger, which cited data from the Standard & Poor’s/ Case-Shiller Home Price Index that was released last month. Experts attribute the state’s still-declining prices to a number of factors, including the fact that sellers are having trouble unloading their homes, which is preventing them from buying new ones. “The trafﬁc we see from buyers is pretty solid — they’re serious about buying a home [and] they’re less worried about losing their job,” David Fisher, vice president of governmental affairs for K.

NJ’s price drop: Single-family homes in northern and central NJ:

-24% from peak -3.4% from last year Hovnanian Homes’ northeast division, told the Star-Ledger. “They’re much more concerned about selling their existing home and just getting enough so that they feel comfortable with the purchase.”

CONNECTICUT

Tax proposal will ‘kill’ housing market A proposed state tax could worsen the already down market in Connecticut, real estate brokers and builders are warning. The Eastern Connecticut Association of Realtors is collaborating with the Builders Association of Eastern Connecticut in opposing a state Senate bill which would impose a 1 percent conveyance tax on homebuyers. The state currently levies that tax solely on sellers.

“It will kill the housing market,” John Bolduc, CEO of the Norwichbased realtors association, told the Norwich Bulletin, a daily newspaper. “The ﬁrst-time homebuyers ... will suffer the most.” For example, with a $250,000 home purchase, the homebuyer would be slapped with a $2,500 tax bill under the proposed legislation. The $95 million that the state is expected to raise through the tax would be allocated to cities and towns instead of state government. Under the current proposal, the tax would be optional — cities and towns would not be required to implement it. WESTCHESTER COUNTY

Long-delayed Ratner project opening soon One of the condo buildings at Forest City Ratner’s long-delayed, mixed-use mega-project in Yonkers will soon be opening. The $660 million project — which sits on 81 acres along the New York State Thruway and has been dubbed Ridge Hill Village —

A rendering of Ridge Hill Village

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will include 1,000 rental and condo units. It will also include 1.2 million square feet of retail, 160,000 square feet of offices and possibly a hotel. According to published reports, once complete, the project — which faced community opposition and legal hurdles — is expected to generate almost $24 million in annual tax revenue for the financially troubled city of Yonkers. It is also expected to generate $8.6 million in county taxes and $29.3 million in state taxes. As of late May, the Horizon Group, the builder of the Monarch condo, which is set to open at Ridge Hill Village, had received deposits for 25 of its 162 units, according to the New York Times. The first occupants are expected to move into the condo — where prices range from $322,000 to $1 million — this summer. Eldad Blaustein, a principal of Horizon, told the Times that construction of a second tower will begin once 70 percent of the units in the first tower are sold. Compiled by Omari Allen

66 July 2011 www.TheRealDeal.com

NATIONAL MARKET REPORT Commercial and residential real estate news briefs from around the U.S.

A rendering of Boston’s Assembly Square

ing, according to the Seattle Times. The program was created in 1998 to encourage development in Seattle’s poorest neighborhoods, the Times said, but in the last three years, for-proﬁt developers have received nearly $100 million in tax breaks under the program. Councilmember Sally Clark said the tax breaks leave many people “suspicious that we’re leaving too much money in the developers’ pockets.”

New Orleans A program that helped more than 400 first-time homebuyers purchase houses once damaged by Hurricane Katrina is ending, the Times-Picayune reported. The Finance Authority of New Orleans’ Soft Second Mortgage Program helped moderate-income, first-time buyers get forgivable loans to purchase homes that have been repaired after being damaged by the storm. The $27 million effort first went into effect in 2008, and a second round of subsidies was slated to commence in 2009 before being nixed, resulting in some 60 people missing out on loans they had already gained approval for, according to the Times-Picayune.

Boston After two decades of delays and false starts, a $1.5 billion revitalization of Assembly Square in Somerville will begin construction this fall, the Boston Globe reported last month. Developer Federal Realty Investment Trust will receive $104 million in federal and state funds for the project, according to the Globe. The project will transform 60 acres of industrial property into ofﬁce buildings, a hotel, homes and an Ikea store. Work will also begin this fall on the construction of the long-planned Assembly Square Orange Line T-station, and AvalonBay Communities will break ground on the site’s ﬁrst two residential complexes. Initially conceived in the late 1990s, the Assembly Square project drew community opposition and later lost funding in the economic downturn. “We’re undoing the mistakes of the past through this project,” said Somerville Mayor Joseph Curtatone.

pany, parent company of the Herald and El Nuevo Herald. Both newspapers will move to another location within two years.

Washington, D.C.

Meanwhile, a Miami Beach house formerly owned by singer and actress Jennifer Lopez has upped its asking price from $29 million to $34.5 million. The 12,000-square-foot home at 58000 North Bay Road is being sold by Mark Gainor, a healthcare professional who bought the property from Lopez for $13.9 million in 2005. “We’ve had several offers in the $20 [million range],” said listing broker Nelson Gonzalez, a senior vice president at Esslinger-Wooten-Maxwell, “but the seller is looking for more.”

As housing prices sank across the country, losing 5 percent from last year, Washington, D.C., has escaped relatively unscathed, according to the Wall Street Journal. In fact, the D.C. metropolitan area remains the only major housing market where prices increased on an annual basis in the ﬁrst quarter, according to a S&P/Case-Shiller report released in June. In April, 5,170 home-sale contracts were signed in the region, the second-highest ﬁgure since 2006, according to the RBI Pending Home Sales Index. The region has been helped by relatively stable employment, with 5.4 percent unemployment in April, down from 6.9 percent at its peak in January 2010, the Journal said.

Las Vegas

Seattle

Two Las Vegas real estate investors, James Adams and Puoy Premsrirut, ﬁled a lawsuit last month against more than 500 neighborhood associations, alleging that the groups charge unlawful fees to the owners of foreclosed homes. According to Business

State Senator Maralyn Chase has asked state Attorney General Rob McKenna to investigate the legality of a city program that gives real estate developers a 12-year property-tax exemption if they set aside 20 percent of their units for affordable hous-

Jennifer Lopez

Miami Genting Malaysia Berhad, Asia’s third largest casino company, has agreed to pay $236 million for the Miami Herald’s headquarters and 14 acres of waterfront land surrounding it, the newspaper reported last month. Genting executives said they would spend $2 billion to $5 billion to transform the site into a mixed-use development, which they said would create thousands of jobs. The landmark deal makes Genting Malaysia a major player in the Miami market and may transform the northern edge of downtown, the Herald said. “This is probably the highest price, or close to it, per acre and per square foot for a land deal in Dade history,” said Michael Cannon, a Miami real estate analyst. “It’s a wonderful piece of property, on the bay between the MacArthur and Venetian causeways.” Genting Malaysia purchased the land from the McClatchy Com68 July 2011 www.TheRealDeal.com

Insider, this suit is the latest development in a long and expensive battle over foreclosed homes in Nevada, which has resulted in various competing bills in the state legislature and dozens of lawsuits. Investors, busy buying up hundreds of homes in the state, say the associations employ debt collectors to charge fees that are illegal. Under Nevada’s real estate laws, the owners of foreclosed homes must pay some, but not all, of the fees normally charged to residents. In most states, homeowners associations receive no fees at all on foreclosed homes. “They’re breaking the law and they know it,” Adams told Business Insider. The associations argue that they need to charge fees to maintain neighborhoods.

Los Angeles MPG Office Trust sold the Westin Pasadena hotel last month to HEI Hotels and Resorts for $92 million, the Los Angeles Times reported. The 350-room Westin Pasadena, located at 191 North Los Robles Avenue, was developed by MPG’s predecessor, Maguire Thomas Partners. It opened in 1989 as part of an office and hotel complex called Plaza Las Fuentes. MPG, downtown L.A.’s biggest office landlord, has recently offloaded a number of assets in an effort to reduce debt, according to the Times. But the sale is seen as a sign of improvement for the hotel business. Real estate investment trusts, hungry for full-service California hotels, are driving prices of select properties back The Westin Pasadena

to 2007 levels, according to consultant Alan Reay of the Atlas Hospitality Group. “[The] market is rebounding off the bottom,” Reay told the Times. Compiled by Katherine Clarke

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Commercial properties recently placed on the market Chetrit, Levy put 620 Sixth up for grabs A partnership of Joseph Chetrit, Yair Levy and Charles Dayan is looking to unload 620 Sixth Avenue. According to the Observer, the nearly 800,000square-foot mammoth anchored by Bed Bath & Beyond could fetch around $500 million. The landlords purchased the Chelsea property for $289.8 620 Sixth Avenue million in 2005, taking out a $235 million mortgage that they nearly defaulted on in the years following. But for a buyer, the building appears to have an upside. There are 250,000 square feet of additional development rights atop the existing structure, plus 75,000 square feet at an adjacent site zoned for hotel development.

New building for sale near the High Line

511-541 West 25th Street

Just a few days after the opening of the High Line’s second phase last month came an opportunity for buyers to get in on the High Line action. CB Richard Ellis is marketing a 200,000-square-foot property at 511-541 West

70 July 2011 www.TheRealDeal.com

25th Street, between 10th and 11th avenues, according to Crain’s. Tesla Motors has a showroom in the building. Darcy Stacom, a vice chairman at CBRE, predicted the new listing would fetch about $500 per square foot, or $100 million. “This is a neighborhood that is coming into its own, and this is an opportunity to get in on it,” Stacom said.

UES apartment building on the block For the ﬁrst time in 50 years, an 83,637-square-foot apartment building at 1143 Second Avenue is available for purchase. The Jones Lang LaSalle marketing team of Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan expect the sixstory property to trade for around $60 million, the New York Post reported. The 1143 Second Avenue rental building has 93 units, including 41 one-bedrooms and 52 studios, as well as 13 stores on the blockfront between East 60th and 61st streets. An additional 77,023 square feet of air rights are available for future development.

price of $19.5 million. The contiguous buildings have 25 apartments, including ﬁve ﬂoor-through units at 272 West 86th Street and 10 units each at 274 and 276 West 86th Street. All of the apartments are vacant with the exception of three rent-stabilized units at 272 West 86th Street. The site has an additional 42,555 square feet of air rights for future development, and a maximum buildable square footage of 61,302. Hall Oster and Timothy Hay of Massey Knakal are marketing the buildings.

LES hotel asking $19 million

UWS townhouses on the market

A new 12-story, 43-key hotel at 5 Allen Street on the Lower East Side is on the market with an asking price of $19 million. The under-construction, limited-service hotel is slated for completion in the fourth quarter of this year, and will come with a management agreement with Howard Johnson that is cancelable. The 15,600-square-foot property is conﬁgured with 22 double rooms and 23 singles, along with a lower ground-ﬂoor level with a backyard garden. Eastern Consolidated’s Marion Jones, David Schechtman, Peter Hauspurg and Philip Huang are handling the sale.

Three ﬁve-story, multifamily townhouses at 272-276 West 86th Street are on the market with an asking

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Deal Sheet summary Sales

Overview

By type

Property sales Deals Dollars

The Deal Sheet, on pages 74 to 82, covers transactions from 5/11/11 through 6/10/11. Please submit future deals to deals@therealdeal.com.

35 $1,379,730,000

Financing

By dollar volume (in millions)

Development

94.85

Hotel

188

Industrial

14.1

Mixed-Use

Multifamily

280.41

19.57

Transactions

Office

691.25

Buildings

Retail

91.55

Aggregate value

$1,073,800,000

Leases Office

Retail

Total

144

Leases square feet Office Retail Total

2,233,884 382,091 2,615,975

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Industry

Advertising & Marketing

Consulting

Entertainment

Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

31,151

CB Richard Ellis

18,771

Square feet leased 1,515,859

Cassidy Turley

101,736

23,800

ARG Realty Consultants

80,000

Cushman & Wakefield

70,162

Denham Wolf Real Estate

63,602

Newmark Knight Frank

59,599

Fashion*

71,443

Financial

249,625

Food & Beverage

24,726

Health & Beauty

107,053

Adams & Co.

Legal

317,891

Media

Medical

NGO

Other / n/a

Publishing

Research

Science & Technology

Textiles

57,711

Colliers International

48,714

7,000

Grubb & Ellis

48,645

5,480

Benchmark Properties

47,779

Williamson Picket Gross

45,000

Jones Lang LaSalle

31,930

Studley

19,372

43,263

Kaufman Organization

11,948

79,305

CBC Hunter Realty

9,329

30,000

Centric Real Estate Advisors

9,280

139,642 27,470 1,057,264

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Department Store

Square feet leased

Retail leases sf by industry 109,000

Winick Realty

54,736

Drugstore

31,202

Kalmon Dolgin Affiliates

42,000

Financial Services

31,425

Ripco Real Estate

29,369

Food & Beverage

57,868

Robert K. Futterman & Assoc.

16,589

Home Furnishings

48,543

Jones Lang LaSalle

15,542

Other

NAI Friedland Realty

14,800

McDevitt Company

14,564

Newmark Knight Frank

12,397

Sholom & Zuckerbrot

10,500

Stone Land Capital

Other

104,053

9,000

Tarter Stats Oâ&#x20AC;&#x2122;Toole

7,150

Sinvin Realty

5,977

Bond New York

4,700

00 May 2www.TheRealDeal.com (*includes showroom space)

www.www.TheRealDeal.com July 2011 73

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 5/11/11 to 6/10/11. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

One World Trade Center

1,046,262

Condé Nast / M. Tighe, G. Tosko, R. Rikhy, CBRE

The Port Authority of New York and New Jersey; Durst Organization / T. Stacom, A. Stein, C&W

The magazine publisher signed a 25-year lease for floors 20 through 41 to be the anchor tenant at One World Trade Center. The company is relocating from 4 Times Square. Over the course of its lease, Condé Nast will pay the landlord $2 billion. But the Port Authority offered several incentives — including agreeing to pay the rent between 2014 and 2019 on Condé Nast’s current lease and promising $46 million in rent rebates over 17 years — to land the media giant, the New York Times reported.

250 West 55th St

180,000

Morrison Foerster / CBRE

Boston Properties / CBRE

The law firm signed a lease for floors 17 through 23 as well as the cellar. The tenant has an option to add more space in the future.

630 Fifth Ave

118,634

Baker Hostetler LLP / J. Maher, P. Mysters, T. Shirocky, CBRE

Tishman Speyer / Represented inhouse

The law firm signed a 15-year lease renewal and expansion.

350 Fifth Ave (Empire State Building)

101,736

Coty Inc. / R. Giordano, R. Bernstein, Cassidy Turley

W&H Properties / R. Kass, B. Cohen, L. Davidson, Newmark Knight Frank

The fragrance and cosmetics company signed an expansion lease for the entire 16th and 17th floors.

125 Broad St

80,000

CNA / A. Grossman, ARG Realty Consultants; S. Siegel, B. Surrey, C. Mansfield, CBRE

Mack-Cali Realty Trust / M. Ravesloot, P. Turchin, G. Miovski, CBRE

The insurance firm signed a long-term lease. The company is relocating from 40 Wall Street.

125 Broad St

56,106

General Reinsurance Corporation / J. Picco, P. Van Duyne, T. Kaufman, C&W

Mack-Cali / M. Ravesloot, P. Turchin, G. Miovski, Z. Freeman, C. Levinson, CBRE

The reinsurer signed a new 21-year, eight-month lease.

1359 Broadway

47,779

Actimize / Michael Beyda, Benchmark Properties

W&H Properties / J. Fanuzzi, B. Waterman, Newmark Knight Frank

The financial software developer signed a lease extension for 23,567 square feet on the fifth floor and expanded onto the entire ninth floor of 24,212 square feet.

733 Third Ave

45,000

New York Compensation Insurance & Rating Board / J. Gross, P. Gross, Williamson Picket Gross

Durst Organization / Represented inhouse

The nonprofit signed a 15-year lease on the fourth and fifth floors. The company is relocating from 655 Third Avenue.

11 West 42nd St

37,036

Oscar de la Renta / J. Robbins, H. Stevens, CBRE

Tishman Speyer / Represented inhouse

The fashion designer signed a lease to relocate its headquarters to the building’s entire 25th floor and part of the 24th floor.

215 West 125th St

32,114

EmblemHealth Company HIP Health Plan of New York / B. Given, S. Jaray, S. Gohil, Colliers International

Cogswell Realty / Represented inhouse

The health insurance company signed a 20-year lease on the second floor. The reported asking rent was $39 per square foot.

570 Lexington Ave

30,263

Rochdale Investment Management LLC / Joseph Harkins, Grubb & Ellis

Tower 570 Company LP / Brian Feil, The Feil Organization

The investment research boutique signed a five-year lease expansion and extension.

251 Park Ave

30,000

Maharam / B. Mendelson, R. Canete, Newmark Knight Frank

F.M. Ring Associates / Represented in-house

The interior textiles company signed a 10-year lease renewal and expansion onto an additional floor.

330 Seventh Ave

24,880

OPERA America / P. Wolf, A. Lawrence, Denham Wolf Real Estate

Super Nova 330 LLC / R. Silver, N. Rubin, Newmark Knight Frank

The nonprofit signed a 20-year lease. The reported asking rent was $35 per square foot.

One Grand Central Place

24,478

Charmer-Sunbelt Group / R. Kass, B. Cohen, J. Christiano, Newmark Knight Frank

W&H Properties / R. Kass, B. Cohen, J. Christiano, Newmark Knight Frank

The distributor of wine, beer and liquors signed a lease renewal and expansion on the 19th floor.

805 Third Ave

23,800

YES Network / G. Issaacson, K. Meyerson, CBRE

Cohen Brothers Realty / B. Mosler, C&W; D. Nevins, Cohen Brothers Realty

The sports network signed a lease on the entire 30th floor. The company will relocate from the Chrysler Building.

11 East 26th St

21,211

Museum of Mathematics / P. Wolf, L. Li, S. Powers, Denham Wolf Real Estate

East Twenty Sixth Associates / J. Buslik, J. Schwartz, Adams & Co.

The nonprofit signed an 11-year lease. The reported asking rent was $60 per square foot.

11 Times Square

17,144

Zukerman Gore Brandeis & Crossman LLP / Ken Rapp, CBRE

SJP Properties; Prudential Real Estate Investors / Peter Turchin, CBRE

The law firm signed a nine-year lease for part of the building’s 15th floor. The reported asking rent was $72 per square foot.

22 Cortlandt St

16,600

Contextweb / Alex Jinishian, Colliers International

Mayore Estates LLC & 80 Lafayette Associates LLC / Barrett Stern, Grubb & Ellis

The web advertising firm signed a lease.

40 Worth St

13,400

Center for Family Representation / Paul Wolf, Denham Wolf Real Estate

40 Worth Associates / B. Steinwurtzel, R. Lapidus, Newmark Knight Frank

The nonprofit signed a 10-year lease. The reported asking rent was $29 per square foot.

777 Third Ave

13,055

Hudson Bay Capital Management LP / R. Martin, R. Masiello, Jones Lang LaSalle

William Kaufman Organization; The Travelers Companies / M. Lenchner, Sage Realty; F. Doyle, A. Flint, A. Tener, C. Wasserberger, Jones Lang LaSalle

The capital management firm signed a new five-year lease on the entire 30th floor. The tenant is relocating to the building.

300 Park Ave

13,000

Experian Hitwise / Paul Formichelli, Jones Lang LaSalle

Rockrose Development / M. Nahmias, A. Peretz, J. Peter, C&W

The global information services company signed a five-year lease.

510 Madison Ave

11,500

World Gold Council / Z. Holzman, P. Revson, Studley

Boston Properties / CBRE

The nonprofit signed a 10-year lease for the entire ninth floor.

400 Park Ave

11,000

Fieldpoint Private Bank & Trust / T. Gibson, W. Levitsky, C&W

Waterman Interests / J. Nugent, D. Mauer-Hollaender, Z. Freeman, D. Kleinhandler, M. Movshovich, CBRE

The Greenwich, Conn.-based bank signed a 10-year lease on the entire 18th floor for its first Manhattan office.

1412 Broadway

10,196

Clover Networks Incorporated / n/a

Harbor Group International / H. Grufferman, H. Springer, L. Greene, Grubb & Ellis

The start-up Internet company signed a 2.5-year sublease.

461 Eighth Ave

10,186

HNTB Corporation / J. Harkins, M. Plavin, Grubb & Ellis

461 Eighth Avenue Associates / n/a

The engineering and architectural firm signed a four-year expansion lease.

565 Fifth Ave

9,280

Gerstein Fisher & Associates / G. Lorberbaum, D. Larsen, Centric Real Estate Advisors

Stawski Partners / D. Ades, E. Goldman, CBRE

The financial advisory company signed a lease for the entire 27th floor.

14 Wall St

8,000

AlaS Consulting / S. Grayson, M. Donova, Vortex Group

Capstone Equities / Jonathan Cope, CBRE

The consulting firm signed a lease for the entire 28th floor. The company is relocating from 7 Times Square.

74 July 2011 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

777 Third Ave

7,872

Sompo Japan Insurance Company of America / K. Otomo, M. Goldman, Studley

William Kaufman Organization; The Travelers Companies / M. Lenchner, Sage Realty; F. Doyle, A. Flint, A. Tener, C. Wasserberger, Jones Lang LaSalle

The insurance company signed a new 10-year lease on the 28th floor. The tenant is relocating to the building.

546 Fifth Ave

7,446

Access Markets International Partners / M. Plavin, J. Cannon, H. Rosen, Grubb & Ellis

Safra National Bank of New York / n/a

The consulting firm signed a five-year lease renewal.

777 Third Ave

7,383

Ivory Investment Management LP / Rand Pear, CBRE

William Kaufman Organization; The Travelers Companies / M. Lenchner, Sage Realty; F. Doyle, A. Flint, A. Tener, C. Wasserberger, Jones Lang LaSalle

The investment management firm signed a new five-year lease on the 25th floor. The tenant is relocating to the building.

38 West 21st St

7,000

10th Street Entertainment / Y. Chang, G. Greenspan, Kaufman Organization

n/a / T. Jacobs, D. Rice, Rice & Associates

The media organization signed a five-year lease. The reported asking rent was $34 per square foot.

48 West 37th St

6,792

Andina Inc. / D. Levy, J. Friedman, Adams & Co.

Forty Eight Thirty Seven Associates / D. Levy, J. Friedman, Adams & Co.

The accessories company signed a five-year lease. The reported asking rent was $32 per square foot.

22 Cortlandt St

6,750

FPHNY / n/a

Mayore Estates LLC & 80 Lafayette Associates LLC / Barrett Stern, Grubb & Ellis

The nonprofit signed a lease.

10 West 33rd St

6,003

Harvic International Ltd. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The fashion company signed a three-year lease. The reported asking rent was $38 per square foot.

1330 Sixth Ave

5,875

Andor Capital Management / Lloyd Desatnick, Jones Lang LaSalle

RXR Realty / Represented in-house

The hedge fund manager signed a five-year lease on the 24th floor.

463 Seventh Ave

5,866

Amerimade Coat Inc. / David Levy, Adams & Co.

The Arsenal Company LLC / David Levy, Adams & Co.

The coat company signed a three-year lease. The reported asking rent was $36 per square foot.

1330 Sixth Ave

5,715

SAT Investment FLP / n/a

RXR Realty / Represented in-house

The asset manager signed a five-year lease on the fifth floor.

42 Bond St

5,700

PSFK / Elizabeth Juviler, Rice & Associates

Jato Realty / Edmond Levy, Cornerstone Real Estate Investments

The online marketing company signed a lease on the sixth floor.

30-2 West 24th St

5,625

The Licensing Company North America Inc. / D. Levy, A. Bonett, Adams & Co.

Twenty Three R.P. Associates / D. Levy, A. Bonett, Adams & Co.

The creator of brand extension programs signed a two-year lease. The reported asking rent was $33 per square foot.

One Rockefeller Plaza

5,600

Cornwall Capital / Greg Kraut, CBRE

Qualcomm / C&W

The investment firm signed a 2.5-year sublease on the 24th floor.

18 East 41st St

5,200

ProMed Personnel Services / J. Buslik, M. Lorberbaum, Adams & Co.

n/a / James Gladstone, Walter & Samuels

The medical and social services staffing firm signed a three-year lease. The reported asking rent was $40 per square foot.

One Grand Central Place

5,162

Foremost Maritime Corporation / n/a

W&H Properties / R. Kass, B. Cohen, J. Christiano, Newmark Knight Frank

The shipping company signed a lease renewal and expansion.

777 Third Ave

5,121

GHS 400 Poydras LLC / R. Emden, D. Emden, Newmark Knight Frank

William Kaufman Organization; The Travelers Companies / M. Lenchner, Sage Realty; F. Doyle, A. Flint, A. Tener, C. Wasserberger, Jones Lang LaSalle

The investment banking firm signed a one-year expansion lease on the 18th floor.

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

158 West 29th St

5,000

Angelsoft / Sasha Majerovsky, Citywide Properties

BRO Realties LLC / Represented inhouse

The deal-flow management software company signed a lease for the entire 11th floor.

424 Madison Ave

4,948

Rifkin & Lubcher / A. Spitalnik, H. Rosenbloom, Kaufman Organization

World Gold Council / n/a

The accounting firm subleased space.

263 West 38th St

4,802

American Symphony Orchestra / Peter Newman, Handler Real Estate

n/a / Peter Newman, Handler Real Estate

The nonprofit signed a lease on the 10th floor. The reported asking rent was $28 per square foot.

317 East 34th St

4,547

Spine Sports & Occupational Rehabilitation PPLC / David Levy, Adams & Co.

317 East 34th Street / David Levy, Adams & Co.

The physical therapists signed a four-year office lease. The reported asking rent was $60 per square foot.

370 Lexington Ave

4,111

Americans for UNFPA / P. Wolf, S. Powers, Denham Wolf Real Estate

Sherwood Equities / Represented inhouse

The nonprofit signed a two-year lease. The reported asking rent was $46 per square foot.

17 Battery Place

4,000

Waterkeeper Alliance / S. Galin, P. Newman, Handler Real Estate

The Moinian Group / R. Sattler, A. Leshowitz, Newmark Knight Frank

The nonprofit signed a lease.

330 West 38th St

4,000

Liman Video Rental Company / D. Danick, R. Selig, P. Sabesan, CBC Hunter Realty

Hudson 38 Holdings LLC / Marc Bengualid, EJMB Realty

The video recording equipment rental company signed a lease.

350 Fifth Ave (Empire State Building)

3,975

Peter Lampack Agency / Douglas Regal, ABS Partners

W&H Properties / R. Kass, B. Cohen, L. Davidson, Newmark Knight Frank

The literary agency signed a new lease.

48 West 37th St

3,068

European Classic Ltd. / D. Levy, J. Friedman, Adams & Co.

Forty Eight Thirty Seven Associates / D. Levy, J. Friedman, Adams & Co.

The clothing company signed a five-year lease. The reported asking rent was $32 per square foot.

777 Third Ave

3,056

Grisanti Brown & Partners / Mark Lauzon, C&W

William Kaufman Organization; The Travelers Companies / M. Lenchner, Sage Realty; F. Doyle, A. Flint, A. Tener, C. Wasserberger, Jones Lang LaSalle

The alternative asset management firm signed a new three-year lease on the 21st floor. The tenant is relocating to the building.

20 Jay St (Dumbo)

2,987

Gothamist LLC / Chris Havens, Creative Real Estate

Two Trees Management / Caroline Pardo, Two Trees

The blog publisher signed a lease.

307 Seventh Ave

2,950

Adventure Publishing / Joseph Friedman, Adams & Co.

n/a / Peter Liptrot, Bernstein Real estate

The publishing firm signed a 10-year lease. The reported asking rent was $35 per square foot.

511 West 25th St

2,904

Hatch Creative LLC / Simone Lillian, Sinvin Realty

25th Street Art Partners LLC / Represented in-house

The flower-arranging company signed a five-year office lease on the third floor. The reported asking rent was $38 per square foot.

317 East 34th St

2,844

New York University / David Levy, Adams & Co.

317 East 34th Street / David Levy, Adams & Co.

The school signed a one-year lease. The reported asking rent was $55 per square foot.

39 Broadway

2,829

New Computech / D. Danick, T. Sullivan, CBC Hunter Realty

The Lawrence Group / Represented in-house

The full-service IT provider signed a lease.

463 Seventh Ave

2,737

Planet Motherhood Inc. / David Levy, Adams & Co.

The Arsenal Company LLC / David Levy, Adams & Co.

The maternity products company signed a three-year lease. The reported asking rent was $36 per square foot.

150 West 36th St

2,500

SDS Financial Services / R. Selig, R. Rozins, CBC Hunter Realty

Albert Malekan / Catherine Oâ&#x20AC;&#x2122;Toole, Tarter Stats Oâ&#x20AC;&#x2122;Toole

The financial services firm signed a lease.

40 West 29th St

2,500

NYC Social Sports Club / n/a

Kew Management / Represented inhouse

The co-ed, recreational sports league signed a lease.

211 East 43rd St

2,488

C-FAM / Waite Buckley, Vicus Partners

n/a / Bob Hinds, Eastgate Realty

The nonprofit signed a seven-year lease on part of the 13th floor.

148 West 37th St

2,488

Sam Roberts Fashions Inc. / James Buslik, Jeffrey Buslik, Adams & Co.

Fashion Associates / James Buslik, Jeffrey Buslik, Adams & Co.

The fashion company signed a six-year lease. The reported asking rent was $60 per square foot.

One Grand Central Place

2,113

Advocates Office Space Inc. / A. Labaton, W. Buckley, Vicus Partners

W&H Properties / W. Cohen, R. Kass, Newmark Knight Frank

The law firm renewed its lease.

411 Fifth Ave

1,991

Infusive Solutions / EFA Realty Inc.

411 Fifth Avenue Associates / David Levy, Adams & Co.

The staffing firm for the technology industry signed a five-year lease. The reported asking rent was $40 per square foot.

370 Seventh Ave

1,839

The Wall Consulting Group / W. Buckley, A. Kaufman, Vicus Partners

n/a / Jack Petrie, Cresa Partners

The consulting firm signed a three-year sublease for part of the 10th floor.

55 Washington St (Dumbo)

1,715

Prolific Interactive LLC / n/a

Two Trees Management / Elizabeth Cottrill, Two Trees

The developer of mobile and web applications signed a lease.

17 West 24th St

1,600

EquaMetrix Inc. / Simone Lillian, Sinvin Realty

Great Northern Realty / Represented in-house

The financial software company signed a short-term, three-month lease on the fourth floor.

352 Seventh Ave

1,500

New York State Industry for the Disabled / Michael Hymowitz, Adams & Co.

AM Property Holding Corp. / Nathan Wasserman, AM Property Holdings

The nonprofit signed a five-year lease. The reported asking rent was $35 per square foot.

20 Jay St (Dumbo)

1,486

NOPSEC Inc. / n/a

Two Trees Management / Elizabeth Cottrill, Two Trees

The IT consulting firm signed a lease.

411 Fifth Ave

1,485

DMF Sales Company / David Levy, Adams & Co.

n/a / David Levy, Adams & Co.

The apparel company signed a two-year lease. The reported asking rent was $39 per square foot.

45 Main St (Dumbo)

1,410

Damn Digital Studio / n/a

Two Trees Management / Elizabeth Cottrill, Two Trees

The digital advertising company signed a lease.

121 Ludlow St

1,400

DHC office / Kelly Lin, Misrahi Realty

Chin & Kim family / Kelly Lin, Misrahi Realty

The tenant signed a lease on the third floor.

215 Park Ave South

1,399

Daversa Partners / Randy Sherman, Murray Hill Properties

Dever Properties LLC / Gary Rosen, SL Green

The executive staffing firm signed a lease for part of the 14th floor. The reported asking rent was $45 per square foot.

419 Park Ave South

1,383

Benson Marketing Group LLC / Waite Buckley, Vicus Partners

Walter & Samuels / n/a

The marketing firm signed a new three-year lease for part of the sixth floor.

463 Seventh Ave

1,366

Pollak Import Export Corp. / David Levy, Adams & Co.

n/a / David Levy, Adams & Co.

The sweater importing and exporting company signed a lease. The reported asking rent was $36 per square foot.

16 West 36th St

1,294

Knights Apparel Inc. / Nicholas Zagar, Adams & Co.

Beach Plaza Corporation / Nicholas Zagar, Adams & Co.

The apparel company signed a lease. The reported asking rent was $39 per square foot.

16 West 36th St

1,100

Gettinger Feather Corporation / D. Levy, N. Zagar, Adams & Co.

Beach Plaza Corporation / D. Levy, N. Zagar, Adams & Co.

The feather supplier signed a one-year lease. The reported asking rent was $36 per square foot.

1123 Broadway

1,090

Semi-Linear LLC / n/a

Kew Management / Represented inhouse

The digital publishing company signed a lease.

231 West 39th St

1,063

Out on a Limb Sales Inc. / James Buslik, Jeffrey Buslik, Adams & Co.

231/249 W. 39 Street Associates / James Buslik, Jeffrey Buslik, Adams & Co.

The fashion company signed a three-year lease. The reported asking rent was $35 per square foot.

www www.TheRealDeal.com July 2011 77

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

45 Main St (Dumbo)

900

Mezzmer Inc. / n/a

Two Trees Management / Natalie Ungari, Two Trees

The retail e-commerce company signed a lease.

231 West 39th St

893

Iconoclasts Showroom Inc. / James Buslik, Jeffrey Buslik, Adams & Co.

231/249 W. 39 Street Associates / James Buslik, Jeffrey Buslik, Adams & Co.

The fashion company signed a three-year lease. The reported asking rent was $35 per square foot.

231 West 39th St

890

Elan International Inc. / James Buslik, Jeffrey Buslik, Adams & Co.

231/249 W. 39 Street Associates / James Buslik, Jeffrey Buslik, Adams & Co.

The manufacturer representative company signed a two-year lease. The reported asking rent was $35 per square foot.

45 Main St (Dumbo)

872

Senovva Inc. / n/a

Two Trees Management / Lisa Kim, Two Trees

The event production company signed a lease.

350 Broadway

750

368 Broadway Studio Inc. / Michael Plavin, Grubb & Ellis

Alishaev Brothers Inc. / n/a

The art studio signed a one-year lease.

1133 Broadway

596

McAlpine Booth & Ferrie Interiors / n/a

Kew Management / Represented inhouse; David Youngworth, Living Real Estate Group

The interior design firm signed a lease.

218 Madison Ave

570

Ovadia Design Group / Moshe Pinsky, Affinity Commercial

218 Madison Company / Annie Yao, Buchbinder & Warren

The architecture and interior design company signed a three-year lease.

1123 Broadway

542

Gotham Glow LLC / n/a

Kew Management / Represented inhouse; Leo Silvia, Level Group Inc.

The airbrush-tanning company signed a lease.

1133 Broadway

433

Girlfriend LLC / n/a

Kew Management / Represented inhouse

The design and branding company signed a lease.

1133 Broadway

392

Whats Your Twenty LLC / n/a

Kew Management / Represented inhouse

The walkie-talkie-rental company signed a lease.

146 West 29th St

300

All Kinds of Books / M. Kabiri, W. Stein, Manhattan Commercial Realty

n/a / Teresharan Land Co. of Manhattan LLC

The book wholesaler signed a five-year office lease. The reported asking rent was $30 per square foot.

165 Madison Ave

280

Dr. Yoav Borsuk / Simone Lillian, Sinvin Realty

Tamar Properties / Represented inhouse

The medical office signed a two-year lease on the sixth floor. The reported asking rent was $32 per square foot.

1123 Broadway

252

Markus R. Huemer / n/a

Kew Management / Represented inhouse

The fashion designer signed a lease.

1123 Broadway

248

Vinos Libres Wine Merchants / n/a

Kew Management / Represented inhouse

The wine importer and distributor signed a lease.

1123 Broadway

228

Rasa Group LLC / n/a

Kew Management / Represented inhouse

The beauty specialist signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

22 Cortlandt St

109,000

Century 21 / n/a

Mayore Estates LLC & 80 Lafayette Associates LLC / Barrett Stern, Grubb & Ellis

The department store signed a long-term lease for three floors of retail space and one floor of offices.

42-90 First Ave (Brooklyn)

36,000

United Store Fixtures Corp. / B. Klein, J. Kline, J. Unger, Kalmon Dolgin Affiliates

n/a / B. Klein, J. Kline, J. Unger, Kalmon Dolgin Affiliates

The shelving and fixture store signed a lease.

70-00 Austin St (Queens)

22,178

Barnes & Noble / Represented inhouse

Muss Development / Represented inhouse

The bookstore signed a lease renewal.

1866-78 Westchester Ave (The Bronx)

17,000

TD Bank / R. Senior, I. Shabot, Ripco Real Estate

1866 Westchester Ave. Corp. / R. Senior, I. Shabot, Ripco Real Estate

The bank signed a 20-year ground lease at the site of a gas station.

136-02 Roosevelt Ave (Queens)

15,542

United HealthCare / Kyle Crennan, Jones Lang LaSalle

Duane Reade / Ann La Centra, Winick Realty

The health insurance company took space previously occupied by a drugstore.

1230 Third Ave

14,564

Anthropologie / R. Futterman, B. Rosen, RKF; W. McDevitt, S. Plourde, McDevitt Company

Tower East Properties Corp.; 190 East 72nd St. Corp. / G. Spiegelman, M. O’Neill, C&W

The clothing and accessories retailer signed a lease. The space includes 5,051 square feet on the ground floor and 9,513 square feet on the lower level.

2406 Amsterdam Ave

12,543

American Home / Richard Smith, Winick Realty

1406-12 Amsterdam / Richard Smith, Winick Realty

The home furnishing retailer signed a lease.

9103 Flatlands Ave (Brooklyn)

12,369

TD Bank / R. Senior, I. Shabot, Ripco Real Estate

Mark Development / R. Senior, I. Shabot, Ripco Real Estate

The bank signed a 20-year ground lease at the site of a medical building.

3942 White Plains Rd (The Bronx)

11,500

Brightside Academy / Kathy Zamechansky, NAI Friedland Realty

Mike Saad / n/a

The day care center signed a lease.

61-35 Junction Blvd (Queens)

10,500

Dallas BBQ / M. Durst, D. Weinstein, S&Z

Vornado / Ripco Real Estate

The BBQ restaurant signed a 20-year lease for its first Queens location.

95 Delancey St

9,000

n/a / Julia Volpe, Stone Land Capital

95 Delancey LLC / Ben Landy, Stone Land Capital

The owners of the Delancey signed a lease for another bar. The reported asking rent was $140 per square foot.

2589 Broadway

8,600

Westside Market / T. Jung, R. Smith, Winick Realty

240 West 98 Street Co. / Ann La Centra, Winick Realty

The supermarket signed a lease.

501 Seventh Ave

8,397

Potbelly Sandwich Shop / J. Roseman, M. Frankel, B. Birnbaum, Newmark Knight Frank

W&H Properties / A. Goldberg, E. Gelber, M. Chmielecki, CBRE

The Chicago-based sandwich chain signed a lease for its flagship location.

67 Broad St

8,160

Duane Reade / Jeff Winick, Winick Realty

75 Broad LLC / Represented in-house

The drugstore signed a lease for another location.

22-26 East 14th St

7,500

Duane Reade / A. La Centra, M. Gleicher, Winick Realty

Sutton Management / A. La Centra, M. Gleicher, Winick Realty

The drugstore signed a lease for another location.

411 Lafayette St

6,100

Kate’s Paperie / Greg Kim, Tarter Stats O’Toole

409 Lafayette Street / D. Rubens, A. Shinn, L. Block, Winick Realty

The stationery retailer signed a lease.

684 133rd St (The Bronx)

6,000

Daimner Corporation / Clark Goldberg, Kalmon Dolgin Affiliates

n/a / n/a

The auto maintenance company signed a long-term lease for its First Star Auto Repair shop.

321 West 44th St

5,000

New York Beer Company / M. Kass, K. Gedinsky, L. Shabtai, Winick Realty

321-44 Associates / M. Kass, K. Gedinsky, L. Shabtai, Winick Realty

The new bar concept signed a lease.

78 July 2011 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

300 West 145th St

4,706

Round the Clock Nursery / S. Baker, A. Hill, Winick Realty

The Related Companies / S. Baker, A. Hill, Winick Realty

The nursery signed a retail lease.

434 Sixth Ave

4,700

Moksha Yoga / J. Robinson, A. Karas, Bond NY

Harran Holding Corp. / J. Robinson, A. Karas, Bond NY

The yoga studio signed a 10-year lease on the second floor for its first New York location.

West 78th Street and Amsterdam Ave

4,206

Sugar and Plumm Purveyors of Yumm / P. Smith, M. Ogle, SRS Real Estate Partners

First New Amsterdam Realty / Represented in-house

The new retail and food concept signed a lease.

39-15 Main St (Queens)

4,015

AT&T / S. Baker, S. Weissmann, Winick Realty

Main 15 Lee LP / S. Baker, S. Weissmann, Winick Realty

The mobile retailer signed a lease.

145 Sixth Ave

3,500

Dahesh Museum / David Badner, Norman Bobrow & Co.

JWS LLC / Roxanne Betesh, Sinvin Realty

The museum signed a 4.33-year lease with a six-year option or option to buy in year two. The reported asking rent was $75 per square foot.

2250 East Tremont Ave (The Bronx)

3,300

Discount store / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

Parkchester North Condominiums / R. Herko, S. Lorenzo, D. Scotto, NAI Friedland Realty

The discount store signed a lease.

192 Mercer St

3,000

Gonzalez y Gonzalez / n/a

n/a / Jordan Gosin, Newmark Knight Frank

The restaurant signed a 15-year lease.

122 Orchard St

3,000

n/a / K. Lin, J. Frank, Misrahi Realty

122 Orchard LLC / K. Lin, J. Frank, Misrahi Realty

The hair salon signed a lease for 1,500 square feet on the ground floor and 1,500 square feet on the lower level.

2385 Broadway

3,000

Ricky’s / Craig Slosberg, Newmark Knight Frank

Zabar family / Christine Emery, Lansco Corp.

The cosmetics and accessories retailer signed a lease for another location.

114 Wooster St

2,400

Victorinox / Michael Glanzberg, Sinvin Realty

108-114 Wooster St Corp. / M. Glanzberg, S. Shannon, Sinvin Realty

The maker of Swiss Army knives and travel gear signed a 5.25-year lease with a five-year option for a new store. The reported asking rent was $225 per square foot.

350 Hudson St

2,400

Hale & Hearty / J. Gettler, M. Gorman, New Street Realty Advisors

Trinity Real Estate / Represented inhouse

The soup-and-sandwich chain signed a lease for another location. The space includes 1,800 square feet on the ground floor and 600 square feet in the lower level.

102 North End Ave

2,150

Bloom Flowers / C. Owles, C. Johnson, Sinvin Realty

GS Site 25 Retail LLC / Goldman Sachs Group Inc.

The florist signed a 10-year lease. The reported asking rent was $75 per square foot.

215 West 125th St

2,056

EmblemHealth Company HIP Health Plan of New York / B. Given, S. Jaray, S. Gohil, Colliers International

Cogswell Realty / Represented inhouse

The health insurance company signed a 20-year retail lease on the ground floor.

490 Sixth Ave

1,678

Spring Star Nail / L. Block, J. Isa, Winick Realty

AIB-79 Associates / S. Baker, J. Siegelman, Winick Realty

The nail salon signed a lease.

229-243 West 60th St

1,580

Pawsitively Love / Rick Johnson, NYCRS

West End Enterprise / S. Baker, S. Mann, Winick Realty

The pet-service provider signed a retail lease.

129 Prince St

1,500

WINK / J. Strauss, Z. Beloff, RKF

Prince-Wooster Corp. / n/a

The women’s apparel retailer signed a lease.

668 Sixth Ave

1,500

BBQe’s Smoke Shack / Robert Kunikoff, Grubb & Ellis

C Realty Corp. / Robert Kunikoff, Grubb & Ellis

The barbeque restaurant signed a 13-year lease.

1622 Bedford Ave (Brooklyn)

1,440

Subway / Abe Labaton, Vicus Partners

1040 Carroll Street HDF Corp. / Abe Labaton, Vicus Partners

The sandwich chain signed a new lease for another location.

229-243 West 60th St

1,427

n/a / Josh Bowling, Sinvin Realty

West End Enterprise / S. Baker, S. Mann, Winick Realty

The nail salon signed a lease.

1026 Second Ave

1,400

Mai Dang Inc. / Eri Kuroki, Exit Realty Landmark

n/a / n/a

The restaurateur signed a 10-year lease for an ethnic concept. The reported asking rent was $103 per square foot.

805 Washington St

1,400

Maxim Eyes Optical / Howard Epstein, Winoker Realty

Romanoff Equities / Represented inhouse

The eyewear retailer signed a seven-year lease.

40 West 55th St

1,153

Mitsosa Group / Young Byunn, Winick Realty

GS 40 West 55th Street / P. Cannon, E. Gelber, CBRE

The luggage and accessories retailer signed a lease.

167-177 Lafayette St

1,050

The Color House New York / Greg Kim, Tarter Stats O’Toole

Eretz Group / Greg Kim, Tarter Stats O’Toole

The photo-printing and imaging lab signed a long-term lease to relocate from Soho. The reported asking rent was $125 per square foot.

210 West 50th St

1,031

Pure Health / Joshua Singer, Winick Realty

Duane Reade / J. Siegelman, A. La Centra, Winick Realty

The health and wellness franchise signed a lease.

416 Amsterdam Ave

1,000

Hummus Kitchen / Davie Berke, Newmark Knight Frank

n/a / Michelle Ball, Rudd Realty

The eatery signed a lease.

540 Ninth Ave

900

Tabata Noodle Restaurant / Eri Kuroki, Exit Realty Landmark

n/a / n/a

The noodle restaurant signed a 10-year lease.

1309 Lexington Ave

871

Thais NY Clothing Ltd. / Gary Schwartzman, Grubb & Ellis

Lexington Towers Co. LP / n/a

The clothing and accessories firm signed a 10-year lease.

150 Prince St

525

Chobani / Marc Finkel, RKF

Henry Hay / Christopher Owles, Sinvin Realty

The yogurt shop signed a five-year lease with a five-year option for its first Manhattan location. The reported asking rent was $762 per square foot.

179 Orchard St

450

n/a / n/a

179 Orchard Corp. / K. Lin, J. Frank, Misrahi Realty

The jeweler signed a retail lease.

100 Stanton St

450

n/a / K. Lin, J. Frank, Misrahi Realty

Flamingo Estate LLC / K. Lin, J. Frank, Misrahi Realty

The fashion boutique signed a lease.

55 Seventh Ave South

350

Orchard Art Gallery / S. Baker, S. Mann, Winick Realty

W&W Realty Associates / S. Baker, S. Mann, Winick Realty

The art gallery signed a retail lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

425 Park Ave

32-story office bldg

TIAA-CREF / n/a

Goelet family / n/a

The land underneath the building sold for $315 million.

200 West 72nd St

196-unit apt. bldg

TIAA-CREF / n/a

Philips International; Rhodes Associates / Darcy Stacom, CBRE

The rental building known as the Corner sold for $209 million, or about $1,400 per square foot. The selling group will hold onto the 48,000-squarefoot retail space in the property, currently home to Trader Joe’s and Duane Reade.

1450 Broadway

42-story, 400,200 sf office bldg

The Zar Group / n/a

The Chetrit Group; The Moinian Group; Edward J. Minskoff Equities / n/a

The property sold for $204 million. The selling group had acquired the building for $121 million in 2004.

80 July 2011 www.TheRealDeal.com The

Buys continued Address

Size

Buyer/ Representative

375 Pearl St

32-story, 1.1 million sf office bldg

Sabey Data Centers; Youngwoo Associates / J. Heller, S. Brady, C&W; R. Solarz, Eastern Consolidated

M&T Bank / D. Stacom, B. Shanahan, CBRE

The majority interest in the building sold for $120 million. Youngwoo Associates took a 2 percent equity stake.

326 West 40th St

243-room hotel

Gehr Development / T. McConnell, J. Kelso, E. Lee, C&W Sonnenblick Goldman

n/a / n/a

The Four Points by Sheraton Times Square hotel sold for $112 million, or about $460,000 per key. Gehr Development also owns the adjacent Fairfield Inn by Marriott Times Square hotel at 330 West 40th Street, which it acquired in 2009 for $99.5 million, or $408,000 per key.

59 West 44th St

174-room hotel

Cornerstone Real Estate Advisers / n/a

HEI Hotels & Resorts / n/a

The Algonquin hotel sold for $76 million. The hotel has changed hands five times in 15 years. HEI Hotels & Resorts had purchased the property for $74 million in 2005.

161 West 16th St

56,870 sf retail condo

Equity One / n/a

n/a / n/a

A fee interest in the retail condo sold for $55 million. The space previously housed the original Barney’s New York flaship and currently houses a Loehmann’s apparel store under a lease that expires in March 2016.

180 Orchard St

Development site

Brack Capital Real Estate; InterContinental Hotels Group / n/a

n/a / n/a

The property sold for $46 million. BCRE will own 51 percent of the shares in the joint venture, while IHG will own the remaining 49 percent. The buyers plan to develop a 290-room Hotel Indigo on the site with a retail component.

356 10th Ave

Development site

Sherwood Equities; Fidelity Real Estate Group / n/a

Barclays / Massey Knakal

The vacant parcel sold for $42 million. The site can support up to 556,000 square feet of residential and/or commercial development. Additional air rights can be purchased for a development of up to 700,000 square feet.

408 Broadway

75,000 sf office bldg

United American Land / Justin DiMare, Newmark Knight Frank

Vanick Properties / n/a

The property sold for $28.7 million through a deed-in-lieu-of-foreclosure process.

44 Berry St (Brooklyn)

6-story, 54,000 sf apt. bldg, 42 units total

ING Clarion Partners / n/a

n/a / n/a

The rental building sold for $27 million. The property was developed by Cayuga Capital Management.

163 Washington Ave (Brooklyn)

16-story apt. bldg, 49 units total

n/a / n/a

GLC Group LLC / n/a

The rental building sold for about $21 million. GLC Group purchased the property in 2005.

750 Eighth Ave

6,183 sf retail condo

Hersel Torkian / RKF

SJP Residential Properties / M. Worthman, B. Eisenman, RKF

The ground-floor retail condo at the Platinum sold for $16.25 million.

10 West 56th St

5-story townhouse

10 West 56th Street LLC / Roxana Girand, Murray Hill Properties

n/a / F. Consolo, J. Aquino, Prudential Douglas Elliman

The property sold for $15.5 million.

450 West 14th St

102,000 sf office bldg

Winthrop Realty / n/a

n/a / n/a

Winthrop Realty acquired a $15 million preferred equity interest in the entity that holds the leasehold interest in the building. The investment is subject to a $54 million first-mortgage loan.

50-02 5th St (Queens)

2-story, 50,000 sf industrial bldg

U. A. Plumbers Local No. 1 / G. Blum, D. Baio, G. Margaronis, Pinnacle Realty

n/a / G. Blum, D. Baio, G. Margaronis, Pinnacle Realty

The warehouse sold for $10.25 million.

123 West 79th St

Office bldg

Maria USA / T. Ghose, M. Kim, R. Gessin, Halstead Property

Westland Industries / T. Ghose, M. Kim, R. Gessin, Halstead Property

The property sold for $8.55 million.

300 Linden Blvd (Brooklyn)

6-story, 58,000 sf apt. bldg, 72 units total

n/a / Erik Yankelovich, GFI Realty

Bronstein Properties / Josh Orlander, GFI Realty

The elevator building sold for $7.7 million. The price represents a gross rent multiple of 9.

293 10th Ave

1-story retail bldg

Ahabel Realty Inc. / Y. Zohar, Zohar Properties; A. Shmaruk, Manhattes Group

Yaron Jacobi / Y. Zohar, Zohar Properties; A. Shmaruk, Manhattes Group

The property sold for $7.4 million.

245 Mulberry St

5-story apt. bldg, 20 units total

n/a / n/a

n/a / J. Ciraulo, R. Burton, C. Waggner, Massey Knakal

The walk-up building sold for $7.25 million, or $751 per square foot. The price represents a capitalization rate of about 6 percent and a gross rent multiple of about 13.4.

456 West 19th St

4,762 sf retail condo

n/a / R. Solarz, E. Anton, Eastern Consolidated

The retail condo sold for $6.55 million.

1424 Herkimer St (Brooklyn)

4-story, 37,000 sf warehouse

1424 Herkimer Street Development LLC / Greiner-Maltz

Bright’s Centennial Inc. / Chadwick Castle, Excelsior Realty Services

The industrial property sold for $3.85 million, or $116 per square foot.

1660 First Ave

4-story apt. bldg, 6 units total

n/a / Eric Lupo, Friedman-Roth Realty

The property sold for $3.15 million. The property also has one retail unit.

139-40 Queens Blvd (Queens)

9,000 sf comm. bldg

Ford Motor Company franchise / J. Kleinberg, P. Bralower, B. Burke, Pinnacle Realty

n/a / n/a

The property sold for $3.15 million.

205 North 7th St (Brooklyn)

4-story apt. bldg, 7 units total

North 7 Acquisition LLC / n/a

Lucky Boy Development / n/a

The property known as the Modern sold for about $2.93 million. The buyer paid $2.35 million for the note held by Hudson Valley Bank, which had a face value of $3.3 million, and $575,000 for the building.

209 Empire Blvd (Brooklyn)

1-story, 16,000 sf retail bldg

Whitestone Realty Group / n/a

n/a / n/a

The retail property with 80,000 square feet of air rights for future development sold for $2.5 million.

214-50 Jamaica Ave (Queens)

14,649 sf comm. bldg

WR-214-50 Jamaica Ave / E. Bukai, R. Senior, Ripco Real Estate

Kimstrauss Unitary Trust / R. Senior, E. Bukai, Ripco Real Estate

The former R&S Strauss site sold for $2.5 million.

12 Mercer St

1,600 sf retail condo

n/a / Greg Kim, Tarter Stats O’Toole

US Color Labs LLC / Greg Kim, Tarter Stats O’Toole

The corner retail condo sold for $2.45 million. The space, with an alternate address of 54 Howard Street, also has an 800-square-foot basement.

405-407 Atlantic Ave (Brooklyn)

2 mixed-use bldgs, 4,500 sf total

n/a / n/a

n/a / S. Palmese, W. Clifford, Massey Knakal

The properties sold for $1.87 million, or $417 per square foot.

133 West 14th St

Retail condo

n/a / Peter Carillo, Eastern Consolidated

Commerce Court 14th Street Inc. / R. Rogovin, A. Kamali, Eastern Consolidated

The street-level retail condo sold for $1.4 million, or about $700 per square foot.

1014 Park Place (Brooklyn)

16-unit apt. bldg

Local investor / David Warren, Barcel Group

1014 Park Place MP LLC / David Warren, Barcel Group

The property sold for $1.35 million. The price represents a gross rent multiple of 8. The apartments have an average monthly rent of $880.

37-41 Lexington Ave (Brooklyn)

16,000 buildable sf development site

n/a / TerraCRG

The three adjacent tax lots sold for $1.2 million, or $75 per buildable square foot.

53 Fifth Ave (Brooklyn)

6,760 sf mixed-use bldg

n/a / Matthew Fotis, Marcus & Millichap

n/a / Marcus & Millichap

The property sold for $1.1 million. The price represents a capitalization rate of about 5.4 percent.

131-11/13 Rockaway Blvd (Queens)

2 mixed-use bldgs

n/a / n/a

n/a / S. Preuss, B. Sarath, Massey Knakal

The contiguous properties sold for $1.1 million, or $229 per square foot.

321 Carroll St (Brooklyn)

2-unit townhouse

n/a / Joanna Marks, Prudential Douglas Elliman

n/a / Justin Dower, Ideal Properties Group

The property sold for $1.03 million.

000 October www.TheRealDeal.com 80 July 20092008 www.TheRealDeal.com

Seller / Representative

Notes

www.TheRealDeal.com July 2011 81

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

West 45th St and 11th Ave

Development site

Gotham Organization / n/a

Wells Fargo / n/a

A $530 million construction loan was provided for Gotham West, a fourbuilding new development that will have 1,240 residential units. More than 500 of the units have been designated for affordable housing.

919 Third Ave

47-story, 1.4 million sf office bldg

SL Green; New York State Teachers Retirement System / Holliday Fenoglio Fowler

Metropolitan Life Insurance Company; Pacific Life Insurance Company / n/a

A 12-year, $500 million mortgage was provided to refinance the property. The loan bears a fixed rate of 5.116 percent and matures in 2023, replacing the former 10-year, $250 million loan that had a 6.867 percent interest rate and was set to mature in August 2011.

425 Park Ave South

73-unit apt. bldg

425 Park South Tower Corp. / n/a

NCB / n/a

A $7.4 million first mortgage and a $500,000 line of credit were arranged for the building.

9 Barrow St

80-unit apt. bldg

9 Barrow Owners Corp. / n/a

NCB / n/a

A $5.5 million first mortgage and a $500,000 line of credit were arranged for the building.

320 East 57th St

92-unit apt. bldg

320-57 Corporation / n/a

NCB / n/a

A $5 million first mortgage was arranged for the building.

144-80 Sanford Ave (Queens)

93-unit apt. bldg

144-80 Sanford Apartment Corp. / n/a

NCB / n/a

A $4 million first mortgage was arranged for the building.

3363 Sedgwick Ave (The Bronx)

134-unit apt. bldg

3363 Sedgwick Avenue Owners Inc. / n/a

NCB / n/a

A $3.7 million first mortgage and a $250,000 line of credit were arranged for the building.

4065 Amboy Rd (Staten Island)

Shopping center

n/a / Jeanne Cronin, Q10 | New York Realty Advisors

Local lender / n/a

A $3.5 million first mortgage was provided for a CVS-anchored shopping center. The loan has a fixed rate of 5.375 percent for seven years, with an option to extend for an additional five-year term on either a fixed or floatingrate basis.

6300 Riverdale Ave (The Bronx)

63-unit apt. bldg

6300 Riverdale Owners Corp. / n/a

NCB / n/a

A $2.5 million first mortgage and a $500,000 line of credit were arranged for the building.

67-87 and 68-09 Booth St (Queens)

109-unit apt. bldg

67-87 and 68-09 Booth Owners Corp. / n/a

NCB / n/a

A $2.3 million first mortgage and a $300,000 line of credit were arranged for the building.

417 Riverside Dr

68-unit apt. bldg

417 Riverside Drive Inc. / n/a

NCB / n/a

A $2.1 million first mortgage and a $500,000 line of credit were arranged for the building.

155 East 93rd St

72-unit apt. bldg

155 Tenants Corp. / n/a

NCB / n/a

A $1.8 million first mortgage was arranged for the building.

599 West End Ave

27-unit apt. bldg

599 WEA Owners Corp. / n/a

NCB / n/a

A $1 million first mortgage and a $250,000 line of credit were arranged for the building.

242 Lafayette St

10-unit apt. bldg

Work of Art Loft Corp. / n/a

NCB / n/a

A $1.1 million first mortgage was arranged for the building.

7520 Ridge Blvd (Brooklyn)

43-unit apt. bldg

7520 Ridge Owners / n/a

NCB / n/a

A $900,000 first mortgage and a $200,000 line of credit were arranged for the building.

Other Deals Related gets $263 million for Yotel space Yotel, the European pod hotel chain that made its U.S. debut in Hell’s Kitchen last month, paid $263 million for its brand new digs in the Related Companies’ MiMA tower at 440 West 42nd Street. According to a deed filed last month with the city, Related transferred the MiMA commercial condominium that Yotel now occupies on June 1. Yotel officially opened its doors two days later. The 669-room hotel offers guests 170 square feet of space in exchange for around $150 per night. Making up the rest of MiMA’s 60 stories are 500 rental units, 151 condos, 23,000 square feet of amenities and 13,000 square feet of retail space. (The deal was announced after the deadline for the Deal Sheet.)

Thor Equities to buy the Scribner Building for $108.5 million Joe Sitt’s Thor Equities went into contract last month to purchase the Scribner Building for $108.5 million, according to the Post. The 12-story-plus-penthouse building at

597 Fifth Avenue, between 48th and 49th streets, features over 12,000 square feet of retail and around 58,000 square feet of office space. The deal also encompasses the adjacent building at 3 East 48th Street and 50,000 square feet of air rights. Leading beauty retailer Sephora is the current anchor tenant in the landmarked interior. (The deal was announced after the deadline for the Deal Sheet.)

Still more Atlantic Yards holdouts crimping Bruce Ratner’s style Two more holdouts are standing in Bruce Ratner’s way at Atlantic Yards, except in this case, the developer doesn’t want to evict them, he just wants them to let him onto their properties in order to do a little underground construction work. According to the Daily News, the state is taking two Atlantic Avenue businesses — museum and trade show shop Global Exhibition Services and a Storage Mart — to court to force them into letting Ratner install underground steel cables known as tie-backs beneath their buildings, a

necessary step for finishing the Carlton Avenue bridge portion of the project. The businesses have thus far rebuffed Ratner’s efforts for fear of property damage, but the state is arguing that eminent domain would allow it to condemn the properties if it had to.

Penn Station, JFK Borders stores likely to close Borders will likely close 51 locations, including those at JFK airport and Penn Station, by June 22 to avoid defaulting on its bankruptcy loan, Crain’s reported. Borders hasn’t been able to negotiate extensions from landlords at those locations on deadlines to assume or reject the leases. Borders’ creditors, led by GE Capital, said they would not allow the bookstore chain to assume the leases itself. In the meantime, Borders will seek permission to sell furniture and equipment from those stores through a liquidator, while asking lenders to grant a grace period until July 21, when Borders goes to court to potentially close on the sale of the entire business. TRD

Follow The Real Deal on Twitter. Why? Because you don’t want to miss out on juicy tidbits from real estate events. Bloomberg says the High Line beats out "Hangover 2" as most important event of the summer. We are headed to the penthouses at Richard Meier On Prospect Park for the big launch. BBQ and cocktails slated for the roof. 80 July July2011 2009www.TheRealDeal.com www.TheRealDeal.com 82

By 9/11, Silverstein had moved some staff into the Twin Towers. He was supposed to be there that a.m., but he had dermatologist appt.

WWW.

.COM

See photo of huge robotic arm at Yotel that takes all the suitcases as you come in. Everything is completely the future.

twitter.com/trdny

Remarkable Sales Success in Brooklyn 350 closed transactions since 2010 $171,000,000 in sales

Corcoranâ&#x20AC;&#x2122;s #1 Ranked Team Brooklyn Heights Office Frank Castelluccio

Aaron Lemma

Senior Vice President Associate Broker 718.923.8084 frank.castelluccio@corcoran.com

Senior Vice President Associate Broker 718.923.8026 aaron.lemma@corcoran.com

The Corcoran Group I 124 Montague Street Brooklyn, NY 11201 The Corcoran Group is a licensed real estate broker. Owned and operated by NRT LLC.

Google

from page 39

the end of 2010, announcing to the world that large deals were possible again. Still, just 12 months earlier, the owners weren’t seriously thinking about selling the building — which occupies an entire square block between Eighth and Ninth avenues and 15th and 16th streets, built in 1932 to be home to the Port

Above: Google’s purchase of 111 Eighth Avenue last December was the nation’s largest investment deal of the year. Right (top to bottom): Stephen Siegel, Darcy Stacom and William Shanahan of CB Richard Ellis, and Doug Harmon of Eastdil Secured.

Authority of New York and New Jersey. The first inklings that a sale might make sense at the property, which insiders say had an annual net operating income of $90 million, came in early 2010. The prior year had been dismal for investment sales, with just $3.5 billion traded in Manhattan, compared to the peak in 2007 of $48.5 billion, data from commercial firm Cushman & Wakefield showed. “[With] the combination of a lot of capital-chasing deals and limited true trophy core offerings, we felt it would

be an ideal time to at least consider a sale of the asset,” Matt Bronfman, managing director at Jamestown, said. Ownership was talking with a number of industry insiders, including Eastdil’s Harmon, to get a sense of what they could get if they sold an interest in the building, and kept an ownership stake. They feared they couldn’t get a high enough price to justify the sale, and there was no reason to sell the cash-cow in a weak market. Michael Phillips, a managing director for leasing and acquisitions at Jamestown, said it was about March 2010 when the ﬁrm began to seriously consider a sale. But for all intents and purposes, the property was really in the hands of Taconic, which bought it in 1998, and later brought on Jamestown and the retirement fund as partners. Pariser, from Taconic, said the talks with Eastdil and others convinced him it was time to recapitalize or sell. “We decided after some level of research that maybe it can get done at levels that excite us,” he told The Real Deal. The assignment went to Eastdil in May after a small competition in the industry known informally as a “beauty contest.” One source said that only one other ﬁrm was seriously considered. But beyond the question of how much the building

would fetch was another issue: Could anyone put together enough debt and equity to pay north of $1.7 billion? Through the summer, Eastdil was telling big investors around the world to save their money, “something big is coming,” the insider said. Once it formally came to market in September, sovereign wealth funds, Asian investors, Chilean groups and even billionaire investors like the LeFraks and Wilbur Ross, were prepared to make offers in an acceptable ballpark. “We had half a dozen groups in a competitive range for the asset,” Bronfman said, but he would not name them. From the outset, Google was always considered in the mix as a possible buyer. But their interest was kept top secret because of fears that their involvement would kill the interest of other buyers, who might be scared off by the cash-rich ﬁrm. They were the only one that could pay all cash. Google was represented by leasing broker Stephen Siegel and investment sales brokers Darcy Stacom and William Shanahan — all at its long-time go-to brokerage, CBRE. Sources said at the time the sellers even asked for more than the revised $2 billion target price. But through back channels, a source said Google representatives learned competing bidders were offering nowhere near that. Bids were coming in at about $1.7 billion, they were told. So Google put in an offer a bit higher than others to absorb some of the risk of taking it off the market. (That account could not be corroborated, and another source involved with the deal strongly disputed it, saying Google had no knowledge of other offers.) But once the two-week marketing lull began, during which time Google presented its purchase plan to its own board, everyone held their breath. Before the end of the two weeks, “We had a handshake,” Pariser said. The contract was signed on Dec. 2, and the deal closed three weeks later on Dec. 22, for $1.77 billion. (Although with additional fees, Google’s total bill came to about $1.86 billion, Pariser said.) “I am not sure it was a much better price than any others, but the best price and best player [combination] was Google,” Pariser said. TRD

Indeed, that deposit became especially crucial in keeping the deal together when the two-year construction schedule proved to be overly optimistic. Delays pushed the completion out to this year. The sale, therefore, closed in January at $33.4 million, city records show. While the contract price was not disclosed, the deal closed only a hair lower, a source said. Another source familiar with the deal described the

event impacting his Trump International Hotel and Tower in Chicago, so he should not be personally liable for loans. Finally, the new VillageCare Rehabilitation and Nursing Center was completed and received its temporary certiﬁcate of occupancy in early 2011, city Department of Building records show. “Maybe at some point because of what was going on, because of the ‘Great Recession,’ maybe for a while it [looked like] it could fall apart, but I think now it’s clear it has worked out great for everybody,” said Ganim. Currently, FLANk, which declined to comment for this article, is converting the building into apartments ranging from 3,300 square feet to 9,000 square feet, the Wall Street Journal reported. Brokers said that large family apartments of that size are in strong demand in that area. “I still think there is a demand for large units in [the Village], if you don’t want to own a townhouse,” said Jon Capobianco, a senior vice president at residential brokerage Corcoran, who is not involved with the project. As for VillageCare’s luck in getting the property sold and not having to cut the price much: “Real estate goes up and down. I don’t look at us as being fortunate, and I don’t look at us as being lucky. I look at us as having put together a really good deal,” Ganim said. TRD

Patients from page 42 ment. Led by Michael Walsdorf, FLANk had successfully developed a condo just a few blocks away at 385 West 12th Street, where the real estate listings aggregator StreetEasy shows that the 12 units sold at an average of $1,891 per square foot. In February 2007, Walsdorf signed a contract to buy the Hudson Street building, city records show. “We found the right buyer who was committed to the area,” Nelson said.

“Absent exigent circumstances, four years in contract? I want to say that is almost a record.” Ira Nesenoff, Nesenoff & Miltenberg There was just one sticky stipulation in the contract: The deal couldn’t ofﬁcially close until VillageCare’s new building was ready. At that time, VillageCare anticipated that building would be ready in as little as two years, in 2008 or 2009, marketing materials showed. FLANk put down a hefty 25 percent deposit, according to a source involved with the deal. (Usually a contract deposit is 10 percent, and sometimes just 5 percent.) “The deposit kept the buyer on the hook,” the insider noted. 84 July 2011 www.TheRealDeal.com

closing price as a minor reduction: “closer to 1 [percent] than 5 [percent].” Through the four-year economic turmoil, the buyer and seller, unlike partners and lenders in many condo development projects undertaken during the downturn, managed to keep the peace. There were no lawsuits traded to get out of the deal or to renegotiate the price. No move akin to developer Donald Trump’s assertion in a 2008 lawsuit ﬁled in Queens that the economic downturn was a “force majeure”

Bubble

from page 16

and now they see them moving in the opposite direction,” Hauspurg said. “So they want to jump in before they have to give money back [to investors], or prices increase even further.” There is indeed talk of higher prices to come. According to the New York Post, a seller at the Seagram Building at 375 Park Avenue is reportedly trying to unload a 49 percent stake for $2,000 a square foot, substantially higher than the record price per square foot for an ofﬁce building, set at $1,585 in 2007 with the sale of 450 Park Avenue.

Skeptics weigh in Still, some industry insiders predicted that current market factors will prevent a true real estate bubble from forming anytime soon. Alpert called the current market activity “over-exuberance.”

He said investors may be paying too much for deals now, but that’s only because so few assets have hit the market; the surplus of building supply currently being held on banks’ balance sheets will soon put an end to that. “There are only a small portion of assets available … and too much money is chasing them,” Alpert said. “But there is a huge pile of assets behind that.” Plus, the still-shaky economy and slow job growth can’t support further price increases, he said. “Doesn’t anyone [paying high prices for buildings] put two plus two together?” he wondered aloud, adding: “Let’s hope they don’t lose their shirts.” Marisa Manley, president of Commercial Tenant Real Estate Representation in Manhattan, agreed. “I see a great number of restraining factors,” Manley said, noting that the city’s unemployment rate still stands at a troubling 8.6 per-

cent. “At this point, I don’t see the factors likely to continue driving property values higher.” Another limiting factor is the continuing scarcity of credit. “The key for a bubble is reliance on credit and ﬁnancing and overleveraging,” said Susan Wachter, a professor of real estate at University of Pennsylvania’s Wharton School. “Leverage isn’t at unsustainable levels now.” Loan-to-value ratios are hovering between 60 and 70 percent, down from a peak of 80 to 100 percent at the zenith of the real estate boom in 2007. These ratios “are starting to creep up,” said Fasulo of Real Capital Analytics. “We have seen some in the 70s during the last couple quarters.” Still, “at least this time investors are using some of their own money,” he said. “I don’t think lenders will let it get crazy again.” TRD

“There’s a web of indemnity out there, and some of it will shake out, and create a financial impact on some title agents and, more specifically, the underwriters,” said Tormey. Despite the tough business climate, Tormey said his firm, which does not often deal with foreclosed properties, is performing well. He credited Titleserv’s closure for some of the bump, noting his company has gained market share and staff. TitleVest has hired four former Titleserv senior staffers, including two top sales executives. Castellanos is hopeful that the increased attention to this once-sleepy corner of the mortgage world will lead to one of his cherished goals: licensure for title insurance agents. The idea, which proponents say will add credibility

to the industry, has been kicked around for years, but recently Albany lawmakers have given it serious attention. A bill that would have mandated licensing of title insurance agents, and levied fines for violations of state insurance law, made it to committee in the state Senate in the last session, but did not pass. Industry insiders are hopeful it will gain traction next year. Still, Castellanos is worried that other proposed legislation intended to help homeowners avoid wrongful foreclosure will backfire, leading to widespread ownership challenges on purchases of foreclosed homes in New York. That, in turn, would lead to huge costs for underwriters and even greater difficulties writing new title insurance policies than Castellanos is seeing now. TRD

“There are a lot of great young operating teams out there [who] need some capital to support their platform, and also need capital for acquisitions for growth,” Ellman said. One reason is that “during the crash, you had a lot of companies that overleveraged, and some have basically split up,” he said. “These talented teams are available and looking for capital to get going with a new operating business.” At the same time, he said, other sources of funding once available to developers have disappeared. “You have very good operators who had high-net-worth investors or ‘friends and family’ providing their general-partner capital, and there are situations where those capital sources have dried up,” he said.

mell Crow still exists, managing its portfolio of some 20,000 apartments, but Brindell explained that he and other top executives are no longer at the company. Seeded with some $200 million from Rockwood and Trammell Crow, Mill Creek has started construction on ﬁve new rental apartment communities, and plans to build 3,000 apartments by the end of the year. One of those projects is in West Hempstead, Long Island, where Mill Creek purchased the run-down Courtesy Hotel and plans to build a four-story, 150-unit rental apartment complex on the site, Brindell said. “We needed liquidity to pursue new business,” Brindell said of Mill Creek’s formation. But potential investors in their projects “wanted to invest in a very clean balance sheet, with no existing assets or liabilities. The banks were requiring the same thing for us.” These days, Westwood’s Alpert noted, investors shy away from developers already juggling large amounts of inventory. “People who are sitting on problems are considered way less attractive,” he said. So new entity-level ventures can mean a new start for real estate professionals, especially industry veterans who “want to strike out on their own but need sufﬁcient capital to start an organization,” Koppel said. TRD

Title insurance from page 36 Castellanos’s company they now make up about one quarter of the business, compared to nothing a few years ago. Title insurers must also deal with another troubled legacy of the housing boom: letters of indemnity. Such letters were often issued in New York during the boom and remain common. For example, if the seller’s title insurance company couldn’t produce a necessary document in time for a closing date, it would issue a letter taking responsibility for legal claims that might arise from omitting that document, so the new title insurance policy for the buyer could be issued without delay. The practice helped deals get done. Now, however, it’s unclear how many of these letters were issued, and how many of those cases actually had legal issues that are still not cleared up.

Private equity from page 48 began to see more properties change hands, Lodging Capital Partners was anxious to get into the market, but needed capital, Ellman said, adding: “It was good timing for both parties.” BRV is the majority shareholder in LCP Berkshire, Ellman explained, and within the company there is a promote structure in favor of Lodging Capital Partners. Still, the arrangement is better for BRV than the traditional structure, because the new venture will benefit from promoted returns on each individual deal. The partnership came about because Ellman had a preexisting relationship and “a level of confidence” in the Lodging Capital Partners principals, from doing deals with them in the past, Ellman said. After watching development deals sour in the downturn, investors are far more focused on the developers’ experience than they were in the past, Alpert said. “In an environment where all boats are being floated, it doesn’t really matter who brings you the deal,” Alpert said of the mid-2000s boom. “But in an environment that’s considerably trickier, there’s a premium put on the expertise of the general partner.” Once private equity funds find partners they trust, they tend to want to stick with them. “These hedge funds like the idea of doing multiple projects with people they like, so they don’t have to reinvent the wheel every time they invest,” noted Eric Anton, an executive managing director and principal at Eastern Consolidated. Meanwhile, there are a number of operators like LCP in the current marketplace, according to Ellman. He said he is looking to partner with developers in other sectors, including senior housing, retail, office buildings and ground-up residential development, on projects in Manhattan and other markets. 86 July 2011 www.TheRealDeal.com

Starting over For developers, even the best of whom have had a rough couple of years, a new venture with a private equity firm can mean a fresh start. For example, Dallas-based Trammell Crow Residential has for years been one of the country’s largest builders of multifamily units. But like many companies of its ilk, the 40-year-old merchant builder fell on hard times as home sales plummeted in the recession. Used to building and selling its properties quickly, the company found itself with some 20,000 apartments on its books by the end of 2010s first quarter. Faced with this difficult scenario, CEO Charles Brindell Jr. — who took the reins of the company from Ron Terwilliger in 2009 — made a surprising move. In August 2010, he partnered with real estate investment firm Rockwood Capital, based in White Plains, N.Y., to form a new company called Mill Creek Residential Trust. Tram-

C O R R E C T I O N S A N D C L A R I F I C AT I O N S An article in the June issue, “Think about it,” incorrectly stated that Hunter Gellin traveled to Thailand during the 2004 tsunami, when in fact it was Mark Shemel who made the trip. An article in the June issue, “Mount Sinai — remade,” incorrectly stated that 4 East 102nd Street, which is near completion, will contain 230 luxury condos. It will, in fact, be rentals.

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Residential market

from page 14

“In every [area] of the city, there is a lack of inventory in three to ﬁve-bedroom apartments that has revealed a tremendous pent-up desire,” Forbes said, adding that this demand has prompted buyers to jump at the listings that do come on the market. “People buying at this level have a certain amount of security, and so they’re not afraid to bid above the asking prices.” Juliette Janssens, a senior vice president and associate broker at Sotheby’s International Realty who is listing a

975 Park Avenue penthouse for $25 million, noted a similar phenomenon. “We’ve noticed a lot of buyers ready to pay all cash for big-ticket apartments,” Janssens said. Meanwhile, the “double-dip” fears plaguing the rest of the country still seem far away to New Yorkers, though some expressed concerns about potential Wall Street layoffs. “Second quarter was positive for us, and we saw a lot of activity,” said Doug Perlson, the co-founder and CEO of Re-

alDirect, a New York City-based brokerage and real estate technology company. “I’m more concerned with the third quarter, especially if the ﬁnancial sector, which bounced back quite strong, takes another hit.” If that does happen, most industry professionals expect the impact to be milder than the ﬁrst downturn. “I am not worried about double-dip decline,” said Karen Berman, a vice president at Argo Residential. “I do expect prices to decline, but [less than] 10 percent.” TRD

into designs, and lenders start to recognize the potential economic drains of non-green buildings. Wilkes pointed to new educational measures and sources of revenue for commercial appraisals — like markto-market accounting standards, in which companies hire appraisers to assess the market value of their assets.

Yet each of these are outside the appraiser’s traditional meat-and-potatoes business — establishing valuations for lenders. That could be troubling for future growth. “In this post-Lehman credit crash, you’d think the value of collateral would be extremely important,” said Miller. “And it’s not. There’s an incredible disconnect.” TRD

2003, she was quickly drawn to new developments. Specifically, this self-described “data nerd” was fascinated with finding out which units sold the fastest and garnered the highest prices. “I have always been curious as to why things worked and why they didn’t, what people wanted and what they did not want,” Kafati-Batarse said. She started purchasing condo offering plans, and hired a team of people to help her enter the numbers into her own database. This growing stockpile of information gave her a leg up when it came to selling new developments, allowing her to unload properties faster than other brokers. “We essentially built a reputation on selling in the shortest amount of time,” she said. As the condo boom accelerated, Kafati-Batarse was recruited by Corcoran Group Marketing, the company’s new development division, which later became Corcoran Sunshine. In 2007, she moved to Elliman, where she is now an executive vice president. With her team of seven agents, project managers and researchers, she currently has 42 active residential listings in Brooklyn worth $24.4 million. That includes 500 Fourth Avenue, a full-service new condo on the border of Park Slope and Gowanus. KafatiBatarse said the building closed 65 units in 2010 and an additional 24 units in the first quarter of 2011, and has another 20 units in contract, leaving the project about 70 percent sold. Another one of her projects, the Pencil Factory in Greenpoint, is now nearly sold out after a year on the market, with only five of 93 units unsold, she said.

direct deal. The developer then converted the house into “an incredible two-family residence,” Buchman recalled. It was later purchased by actor Kiefer Sutherland in 2008 for $8.25 million, according to public records. Buchman currently has 25 listings worth $23.7 million in Brooklyn, and like most top Brooklyn brokers, she sells both new development and resales. For example, she’s currently listing a townhouse at 409 Eighth Street in Park Slope for $2.99 million, as well as handling sales at the 21unit Harbor Hill Condominium on 15th Street.

Appraisals from page 50 in the past. To that end, Schleider looks at weatherization, energy efﬁciency and other environmental claims a building may make to determine whether savings advertised by property owners or developers can be monetized. It’s a service he believes will become increasingly necessary as more buildings incorporate environmental components

Top Brooklyn agents from page 53 at Richard Meier’s On Prospect Park, one of the highest-proﬁle new developments in Brooklyn. Nielsen-Saaf got the gig because she’d worked with the developer, SDS Procida, on several other projects, including 149-unit be@Clinton at 516 West 47th Street in Manhattan, which she sold out in only eight days in 2006. Of course, that was before the downturn. Despite its starchitecture pedigree, On Prospect Park has sold slowly in the recession. Still, 75 percent of the project — including two penthouses — is now sold and occupied, NielsenSaaf said. Three penthouses currently on the market are listed at $2.75 million, $4.9 million and a whopping $5.1 million — pricing some say is too ambitious for the building’s location on the border of Park Slope and Prospect Heights. “I can understand people saying that because they’re not used to seeing those numbers,” Nielsen-Saaf said. But she said that the price per square foot — around $1,400 — is comparable with other sales in the area.

No. 6: Frank Castelluccio and Aaron Lemma, the Corcoran Group New development specialists Frank Castelluccio and Aaron Lemma, who call themselves the CastLe Group, have worked together for three years. Based out of Corcoran’s Brooklyn Heights ofﬁce, they are listing 31 Brooklyn homes worth $27.8 million. Recently, they’ve been recruited to jumpstart sales at several previously troubled projects. For example, the two were brought in last spring to re-start sales at stalled condo be@Schermerhorn in Downtown Brooklyn, where construction delays had forced the developers to let the original buyers out of their contracts. With prices cut, 245 of the building’s 246 units have now been sold, Lemma said. The CastLe Group was also hired to take over sales at Clermont Greene in Fort Greene, which had originally been a Prudential Douglas Elliman project. Twenty months later, that project is 75 percent sold, Lemma said. Now, the two are shifting their attention to two new projects, both of which hit the market last month, Lemma said. One, 233 Paciﬁc Street, is a new 30-unit condo with a projected sell-out of $37 million. In addition, 75 Clinton Street is a 74-unit condo in Brooklyn Heights with a projected sellout of $64 million.

No. 7: Joyce Kafati-Batarse, Prudential Douglas Elliman When Joyce Kafati-Batarse started working at Corcoran in 88 July 2011 www.TheRealDeal.com

No. 8: Jessica Buchman, the Corcoran Group When Jessica Buchman first moved to Park Slope, she was a new mom focused on staying at home with her daughter. But when she decided to become a real estate agent several years later, she drew on her sales background as a fashion buyer at Barneys. “I found the transition quite easy,” recalled Buchman, who started at Corcoran six years ago. Of course, there was hard work involved. Buchman worked “seven days a week for three years” to get her business off the ground. It paid off: She’s been named the top broker in Corcoran’s Seventh Avenue office in Park Slope for the last four years straight. But she has ventured outside of Brooklyn. In fact, her first year on the job she sold a $6 million house at 763 Greenwich Street in the West Village to a developer in a

No. 9: The Kleiers, Gumley Haft Kleier Big-time Manhattan broker Michele Kleier and her two daughters, Samantha Kleier Forbes and Sabrina Kleier Morgenstern, usually work on Manhattan’s Upper East Side. So it was a bit surprising when, in April, they began marketing Brooklyn’s priciest listing: David Walentas’s legendary triplex in the ClockTower Building. Walentas, who converted the ClockTower into condos in 1998, later struck a deal with the condo board to create a 16th-ﬂoor penthouse in a tower atop the building. The resulting apartment ﬁrst hit the market for $25 million in 2009 with Raphael De Niro (another top broker who works mostly in Manhattan), and has been on and off the market since then. However, the Kleiers have recently shot to fame, thanks to starring on the HGTV show “Selling New York.” So when Walentas put the ClockTower triplex back on the market after a hiatus last year, he was likely hoping their star power would help sell the apartment, which is now listed at $23.5 million.

No. 10: Deborah Rieders, the Corcoran Group Deborah Rieders, who has lived in a townhouse in Boerum Hill for 19 years, is a former landscape and architecture photographer. Using this artistic background, she personally “art-directs” the marketing of each of her listings, she said. Rieders takes so much pride in the presentation of her listings, she said, that to her, “the best compliment is, ‘it looked better online.’” Her aesthetic sense appears to translate into dollar signs for her sellers. She’s currently marketing 40 Brooklyn listings worth $23 million, and she said she recently sold a townhouse at 421 12th Street in Park Slope for an impressive $900 per square foot. She also recently ﬁnished the sellout of 44-unit Park Slope condo C-560. TRD

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bulge so that “the house actually looked pregnant,” she recalled. But “for some reason, I was able to see through all those things,” she said. “I had a sense of what it would be.” Plus, it was located on a pleasant block only 10 minutes from her university job. After mulling it over for a few days, Cuonzo put in an offer, and she and the seller negotiated a price. Cuonzo even agreed to lease one of the apartments back to the seller once the house was renovated. Surprisingly, that’s when the real challenges began. “At that time in the lending world, it was really difﬁcult,” Sicignano said, recalling that the process of getting a mortgage was “long and grueling.” “They asked for all this crazy documentation,” Cuonzo said. She had to write a letter explaining her reasons for buying the house. Then, inexplicably, she had to supply proof that her current apartment — a rental on the sev-

enth ﬂoor of a residential building — wasn’t “a bar, restaurant or nightclub.” She was also asked to prove she didn’t have a mortgage on a small cabin she owns upstate. Since Cuonzo bought the cabin with cash, she didn’t know how to proceed. “How can I prove a negative?” she remembers thinking. Then, when appraisers visited the house, they deemed it to be in “below average condition,” Sicignano said. As a result, the bank refused to approve the loan. At that point, Cuonzo was having second thoughts about the wisdom of the purchase. Luckily, “Jacqui is very calming,” Cuonzo said. For her part, Sicignano was pouring hours and hours each week into making the deal happen, despite the fact that she had other clients. “I was really taking it on like it was a full-time job,” she said. When the deal ﬁnally closed, she was rewarded — literally — with REBNY’s Residential Deal of the Year award for 2010.

But in order to make that happen, Cuonzo ended up having to send contractors into the house to repair the ceiling and pipes, even before she’d purchased it. “I had to send contractors into the house to do some repairs in order to get the financing in place,” she said. “That was a risky thing to do, because you’re basically renovating someone’s house for them.” With those repairs finished, she was finally able to get a mortgage, and the deal closed last May. There were more obstacles to come; the seller and her sons didn’t move out until September, and when they finally did leave, the carpets were swarming with fleas left by the pit bulls. At last, Cuonzo was able to start a $250,000 renovation on the house. She’s hoping to move in by November — in which case, she really will have something to celebrate on Turkey Day. “Thankfully, it all worked out in the end,” she said. TRD

Azure from page 47 were ultimately defeated. The Urban Glass House, the condo next door to the garbage and salt shed, has suffered. The building, which launched in 2005, did not see a single resale until this year, despite several apartments sitting on the market for months with marked-down asking prices, according to data from StreetEasy. Teplitzky isn’t worried, saying she has faith that the powerful Upper East Side community will prevail in blocking the project from moving forward.

“Seven years ago, they wanted to open a Toys ‘R’ Us at the Richmond condominium, at 201 East 80th Street,” she said. “On the Upper East Side, you have a lot of very strong people that live here. They all got together and protested and it was not opened. I just can’t imagine that [the waste transfer station] will [happen].” For now, Azure is waiting patiently as the developers try to move the remaining units at the prices they have stuck with for years.

Mattone and DeMatteis both deny industry speculation that the building might wind up going part-rental and say they’d still be interested in doing more cond-op projects through the Educational Construction Fund in the future. “We would deﬁnitely be interested in the next project coming out,” said John Caiazzo, the director for real estate development at DeMatteis and the former head of the ECF. “The issues we faced with this project because of the slowdown [did not] deter us.” TRD

Colliers from page 59 franchises west of the Mississippi in California, Phoenix and Seattle. But they still didn’t own ofﬁces in New York, Washington, Boston, London or Chicago. That was the next step. Acquisitions in those markets would help tip FirstService’s ownership stake over the 70 percent needed to control the company. Then it could rebrand the name, play a large role in who could use its brand, and standardize methods for global cooperation. GVA Williams — which advised on more than $3.4 billion in commercial real estate transactions and managed 16 million square feet of commercial property — agreed to sell a 65 percent stake to FirstService for undisclosed terms. In a report to clients analyzing the deal, Bastien estimated that FirstService paid roughly $35 million for the New Yorkbased ﬁrm. Jaccom, Freedman, Roos (now vice chairman and principal) and Cohen (now president of the Tri-State region) each retained a 5 percent stake in the company, while the rest was split between senior brokers. It’s a blueprint FirstService is implementing elsewhere. In general, FirstService — which had revenues of $1.99 billion in 2010 — prefers to gain a controlling interest in the companies it acquires, allowing local ownership to retain a stake so they have an incentive to grow it and stay on board.

Only a year old At the time it bought GVA Williams, FirstService had 147 ofﬁces in 46 countries and generated about $1 billion in revenues. The new Colliers, Jaccom said, has 510 ofﬁces in 61 countries and by sheer revenues is “the third-largest in the world.”

Jaccom said instead of losing clients because his firm cannot service all of their needs around the globe, the firm is now winning new ones who have dealt with Colliers elsewhere. In addition to Colliers International, FirstService owns a number of other real estate firms, including PKF Consulting and PKF Hospitality Research, as well as a residential property management arm that oversees 24 million residential units worldwide and generated $662 million in revenue in 2010. Locally, it owns Cooper Square Realty, which manages 400 condos, co-ops and rental properties valued at more than $5 billion. National Real Estate Investor, a commercial real estate trade magazine, ranks Colliers International fourth, with investment sales and leasing transactions totaling $59.6 billion last year. That compares to CBRE, which had $128.1 billion, JLL with $67.2 billion, and Cushman at $66.8 billion. FirstService, said Stephen MacLeod, an analyst with BMO Capital Markets, is in “great shape” financially. “They have growing EBITDA [earnings before interest, taxes, depreciation and amortization], they’re not very highly leveraged, and they have pretty good cash flow,” he said. “Globally, as part of the strategy, they have been going out and aggressively recruiting brokers and they appear to be going out and taking some away from the likes of Jones Lang LaSalle and Grubb & Ellis. They are becoming more competitive against CBRE and JLL.” Jaccom, for his part, remains in full recruitment mode. “Maybe this sounds pompous, but I’m a broker for 32 years, and brokers are insecure,” Jaccom said. “This is a place where they can trust each other, leave doors open.

At other places, a lot of junior brokers get screwed around by senior people. That doesn’t happen here. I weed out the assholes. And commissions for junior brokers are negotiated up front.” Alan Desino, one of Colliers’ prized recruits, joined the firm from CBRE. He said he joined Colliers because he wanted a firm with more of a focus on tenant representation. He also cited the collaborative culture, and noted that information “doesn’t reside in silos.” “Every time we have potential new clients, we meet as a group … to really create a specific package and recommendations to that client,” he said. Still it’s competitor JLL that has garnered attention for reeling in the bigger fish lately. In the spring of 2010, the firm hired investment sales brokers Richard Baxter, Ron Cohen, Scott Latham and Jonathan Caplan. And, more recently, it brought on leasing brokers Mitch Konsker and Paul Glickman, among others. “I’m not aware of Colliers hiring,” said Peter Riguardi, president of JLL’s New York region. “We’ve hired a dozen of the top producers in town over the last couple of years, so we’re pretty excited by that. “We consider anyone in the game a competitor, particularly locally in New York,” he added. “But on a comprehensive international basis, competing for a global type of project, we don’t discount them, but don’t see them as much as we see CBRE.” That may soon change. “We’re a year old,” Jaccom said, dating the new era to the launch of FirstService’s rebranding campaign. “Are we CBRE, JLL? Not yet. But are we competing with them? Absolutely; we got them on the run.” TRD

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Commercial market

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27th and 42nd streets in the average price range. “The activity for office space in the $40 to $50 per square foot range, or even less, is tepid, it’s lukewarm,” Grant Greenspan, a principal with landlord Kaufman Organization, said. “I don’t believe there is a lot of positive absorption going on [in this specific area].”

Midtown South While Midtown may lure technology firms from time to time, Midtown South is still the heart of the city’s Internet community. CoStar showed that Interactive Partners inked a new lease for the entire 10th floor of 100-104 Fifth Avenue. The asking rent was $55 per foot for the 5,405square-foot space. “You have health care expanding and Internet and related technologies expanding [in the area], that is the positive absorption,” Greenspan said. The Kaufman Organization was also near a deal with another technology firm that was negotiating to lease floors 14 and 15 in the building, located between 15th and 16th streets, he said. And it wasn’t just tech firms that were taking space in the market. New York University’s Langone Medical Center inked a five-year deal for 10,000 square feet at 104 East 25th Street in the Flatiron District. Cushman brokers Mosler, Josh Kuriloff and Mark Mandell represented the school, but declined to comment. But it was not all positive in Midtown South, Greenspan noted. Many nonprofits and public sector unions that receive government funding are contracting because of city and state budget cutbacks. “When a landlord looks at these companies, [he is] more suspect of where the sustained funding is coming from,” he said. The availability rate in Midtown South dropped sharply in the second quarter, the Cassidy Turley figures revealed, falling by 1.1 points to 10.4 percent. The average asking rent rose by $2.27 per foot to $40.48 per square foot.

Downtown The Downtown market has lagged since the recovery began in Manhattan. And last month it was dealt a double blow — at the World Financial Center, which is owned by Brookfield Office Properties. Normura Holdings, which had been subleasing space there from Bank of America, inked its new deal in Worldwide Plaza in Midtown. Meanwhile, Bank of America is shrinking its overall footprint in the building to just 750,000 square feet, from the 4.6 million square feet it now has, which expires in 2013. (It inherited the 4.6 million square feet from Merrill Lynch when it acquired that company in 2009.) Lower Manhattan has been feted over the past two months because of the 1 million-square-foot Condé Nast lease at One World Trade Center. But two other enormous leases — which were agreed to in 2006 with the City of New York and the Port Authority of New York and New Jersey — reached a bit of a milestone as well last month. CoStar loaded the leases (which together totaled about 1.2 million square feet) into its database for Silverstein’s 4 World Trade Center, which is about 50 percent complete. The City of New York is expected to take about 582,000 square feet and the Port Authority about 600,000 square feet, data from Cassidy Turley showed. The new information was supplied to CoStar by Silverstein’s leasing agent CB Richard Ellis, the data firm told The Real Deal, although it did not provide further details. A spokesperson for Silverstein declined to comment. Insiders said it amounted to a clerical notation, memorializing what most brokers already knew about that Lower Manhattan space. “I think at the end of the day, it was catching up some of the information and getting it over to CoStar,” Studley’s Shapses speculated. Yet even with the big chunks of space taken off the market, there is still a lot of inventory Downtown. “I think there is still plenty of space to choose from. [But] I will say, when you are a 200,000- or 300,000-square-foot tenant, your options are more limited,” Shapses said. The Downtown market was the only market to see asking rents decline in the second quarter, but they fell in part because of expensive space at 7 World Trade Center, which had some of the top rents in the market, being taken off the market, Sammons said. The availability rate in the market fell a sharp .9 points to 12 percent in the second quarter, while asking rents dropped by $0.27 per foot to $37.46 per square foot, Cassidy Turley figures showed. The shrinking of Bank of America space was not reflected in the data for the second quarter because the space is not yet available. TRD 92 July 2011 www.TheRealDeal.com

J UL Y

C A L ENDA R 1

The Association for Corporate Growth New York brings real estate professionals together with members of other “deal-making” industries for SummerBash 2011. The annual event aims to help attendees network and build relationships with colleagues in their fields. Food and cocktails will be served. Over 300 attendees are expected. 6 p.m. to 9 p.m. Central Park Boathouse, East 72nd Street and Park Drive North. Fee: $100 for members; $175 for nonmembers. Information and registration: www.acg.org/nyc.

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11-13

The Building Owners and Managers Association presents a leasing and marketing class. The course, which can be taken as an independent study or toward RPA designation, will be taught by Jerome Silecchia, senior vice president at ABM Engineering Services. July 11 and 12, 9 a.m. to 5:30 p.m.; July 13, 9 a.m. to 6 p.m. 11 Penn Plaza, Suite 2201. Fee: $1,445 with designation, $1,285 without designation. Contact: Mary Ellen Sorgente at (212) 239-3662 ext. 208, or mary@bomany.com.

The Council of New York Cooperatives and Condominiums holds a seminar called “The Asset Over Your Head” to help attendees decide whether it is appropriate for their co-op or condominium to convert roof space for sale to individual owners. Attorney Dennis Greenstein and co-op board member Robert Miller discuss the elements involved in this issue. 6 p.m. Free for representatives of CNYC member buildings; $60 for nonmembers. Advanced registration required. Contact: (212) 496-7400 or workshops@cnyc.coop.

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New York City Habitat for Humanity presents a day dedicated to the construction of its newest development in Ocean HillBrownsville, Brooklyn. The project, Habitat-NYC’s first new construction initiative, is part of a goal to provide 100 new residences in central Brooklyn by restoring vacant buildings in the area. The St. John’s Residences will provide a dozen low-income families with affordable two- and three-bedroom condos that meet LEED and Energy Star standards. 8:45 a.m. to 4:30 p.m. Free. Information and registration: www.habitatnyc.org.

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The New York Association of Realty Managers hosts its mid-year buffet luncheon and networking reception for property managers, building superintendents, building engineers, owners and contractors. 10 a.m. to 1 p.m. 405 East 73rd Street, First Floor. Fee: $85 for members; $105 for nonmembers. Contact: (212) 2160654 or mrussell@nyarm.com.

Schein Media presents its 2011 Westchester Real Estate Conference, featuring a panel discussion and cocktail party for real estate brokers and developers. Panelists include Yonkers Mayor Philip Amicone, Neil Alexander, a partner in the Environment & Sustainability Group at Cuddy & Feder LLP, and Arthur Mirante, president of global client development at Cushman & Wakefield. 2:30 p.m. to 6 p.m. 1133 Westchester Avenue, White Plains. Fee: $75 per person for groups up to three; $60 per person for groups of four or more. Information and registration: www.events.scheinmedia.com.

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The New York Commercial Real Estate Women’s Network hosts the second installment of its “Leading Ladies of NY Real Estate” summer breakfast series. 8 a.m. to 9:15 a.m. General Electric, 280 Park Avenue, 8th floor. Fee: $25 for members; $45 for nonmembers. Information and registration: www.nycrew.org.

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The Real Estate Board of New York holds a members-only seminar titled “Sales Agent Boot Camp: Running It Like a Business.” Speakers include Barak Dunayer of Barak Realty. 9:30 a.m. to 12 p.m. REBNY Mendik Education Center, 570 Lexington Avenue. Free for REBNY members. Information and registration: www.rebny.com.

24 The American Institute of Architects hosts a forum called “The Gestalt of Color,” offering tips on using color to enliven interior space. Speakers include Applied Arts School for the Arts Director Elizabeth Dow, Rockwell Group interior designer Matthew Goodrich and architectural color consultant Eve Ashcroft. 6 p.m. to 8 p.m. Bard Graduate Center, 38 West 86th Street. Fee: $25. Information and registration: www.bgc.bard.edu.

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The New York chapter of Professional Women in Construction presents a forum entitled “Regional Transportation Update: Transportation Chiefs and Industry Leaders Outline Plans.” The forum will be moderated by Fife Group president William Fife, and panelists include New Jersey Transit Executive Director James Weinstein, MTA Capital Construction President Michael Horodniceanu, and New Jersey Turnpike Authority Executive Director Veronique “Ronnie” Hakim. General Society of Mechanics and Tradesmen, 120 West 44th Street. 8 a.m. to 10 a.m. Fee: $75 for PWC members; $85 for nonmembers; $95 for nonmembers purchasing tickets at the door. Information and registration: www.pwcusa.org/ny.

31 94 July 2011 www.TheRealDeal.com

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