A judge ruled today that Adam Hochfelder, founder and chairman of commercial landlord Max Capital Management Corp., will go to trial on fraud charges in a case alleging he misrepresented the value of his real estate holdings to extract loans from business partners, banks and even family members. The decision today will allow prosecutors to move forward on charges against Hochfelder, a noted New York City office building owner. Max Capital Management holdings have included 237 Park Avenue and the Helmsley Building at 230 Park Avenue. Hochfelder once claimed to own $2.7 billion in properties and used that false information to garner millions from unsuspecting lenders, the New York Times reported. The next hearing on the case is set to begin Jan. 15. Hochfelder was first arrested in August 2008 and now faces 58 counts of criminal activity, such as fraud and grand larceny.
Reed Construction Data has amplified the claims in its lawsuit against McGraw-Hill Construction Dodge, which Reed alleges used several fake companies to access its database, according to the Associated Press. The original suit, filed Oct. 8, claimed that since 2002, Construction Dodge, another construction database company, posed as Reed customers in order to review the latter company’s information. The revised complaint, however, now claims that thousands of Reed project documents were obtained through the fraud and that Construction Dodge made erroneous claims, which stated that its product was better than Reed’s. The complaint now includes allegations of fraud, misappropriation of trade secrets, misappropriation of confidential information and unfair competition.
Reed Construction Data has amplified the claims in its lawsuit against McGraw-Hill Construction Dodge, which Reed alleges used several fake companies to access its database, according to the Associated Press. The original suit, filed Oct. 8, claimed that since 2002, Construction Dodge, another construction database company, posed as Reed customers in order to review the latter company’s information. The revised complaint, however, now claims that thousands of Reed project documents were obtained through the fraud and that Construction Dodge made erroneous claims, which stated that its product was better than Reed’s. The complaint now includes allegations of fraud, misappropriation of trade secrets, misappropriation of confidential information and unfair competition.
A potential Hell’s Kitchen development by Gotham West has community activists and parents riled. The project, which would occupy most of a square block between 44th and 45th streets and 10th and 11th avenues, would add 1,200 apartments to the neighborhood, but would also displace the 100-year-old P.S. 51. Parents of students enrolled at the school say they’re worried the project could force kids into crowded facilities, while significantly reducing the amount of play space in the neighborhood. State Senator Tom Duane is particularly concerned about the reduction of playground space, commenting that “it will be half the size of the current playground for twice the amount of students.” The City Planning Commission has until Jan. 29 to vote on the proposed development.
1. Penthouse owner comes home early from vacation to find doorman taking nap in guest room [Curbed] 2. Sales launch at Gowanus condo building at at 232 Seventh Street [Brownstoner] 3. Famed event planner and socialite David Tutera places Manhattan home on market [Realestalker] 4. City may reinstitute plan to make NYC homeless pay rent to stay in shelters [Indypendent] 5. Council member-elect targets DOB inspections [NYDN] 6. Potential buyer could save 60-year UES mainstay Gino [NYT] 7. Skate park under Brooklyn Bridge to be closed for four years due to overpass painting [Gothamist] 8. Controversial District 20 school rezoning plan in Brooklyn approved [Post] 9. East Hampton’s Sea Spray Cottages to go up for auction in February [Curbed, 2nd item] 10. New tax legislation could be gamechanger for mortgage investors [Housing Wire] 11. $5B cut from Port Authority capital budget [NYO]
From the December issue: If the last 12 months have served as a humbling recalibration of the entire U.S. economy, then there is perhaps no urban office district more representative of America’s fall from opulence than the commercial stretch along Park Avenue in Midtown. For decades, it was the province of the financial titans, including JPMorgan, Lehman Brothers and UBS, whose paychecks and egos were matched, in part, by Park Avenue’s astronomical asking rents in its premier buildings. But now, much like its former white-gloved denizens, Park Avenue is an empty shell of its former self. The Park Avenue submarket -- which runs from Grand Central to 59th Street -- has fallen harder and faster than any other Manhattan submarket over the past 12 months. According to Cushman & Wakefield, from October 2008 to October 2009, average asking rents dropped 34.7 percent, from $108.57 per square foot to $70.85 per square foot. By comparison, overall asking rents in Manhattan fell 22 percent during the same period.
A Bronx property owner pleaded guilty today in Manhattan federal court to charges that he fraudulently sold a commercial building for $5.9 million earlier this year, authorities said.
According to prosecutors, Mark Benun, 35, partnered with another company to buy the building at 67-79 East 161st Street in 2006 for $9.5 million. Benun, who brokered the deal, was given a 25 percent interest in the property, while the other investor, identified in city property records as Lido Realty of Brooklyn, held a 75 percent interest, according to the US Attorney in Manhattan. Despite his minority interest, Benun sold the property in February 2009 for $5.96 million using forged deed and mortgage documents, prosecutors said.
Following the bogus sale, Benun wired at least $450,000 to other bank accounts, and in addition withdrew about $1.4 million which he used to buy gold bars in Manhattan. TRD
From left: Joseph Moinian and his 50 West 23rd Street, and Sitt Asset Management's 240 West 40th Street
Fitch downgraded a group of securitized loans from Wachovia Bank that includes a Flatiron office tower owned by Joseph Moinian and a Midtown office tower owned by Sitt Asset Management.
The ratings agency downgraded eight loans by Wachovia Bank Commercial Mortgage Trust series 2005-C19, citing concerns about declining cash flows and commercial real estate values.
One Moinian loan is backed by the developer’s 13-story office tower at 50 West 23rd Street in the Flatiron District. The building was 97 percent occupied as of October and has a debt service coverage ratio of 1.52 percent as of June, according to Fitch. A building with a ratio of less than 1 is considered to have negative cash flow.
In June, the building’s broker, Newmark Knight Frank, renewed the 64,000-square-foot lease for a magnet school, called the Manhattan Village Academy for lower rent, following more than a year of negotiations.
While the rest of the country looks forward to a bit of a respite in the hard, grinding slide of property prices, New Yorkers will enjoy less relief in 2010. Mark Zandi, chief economist of Moody's Economy.com, said prices are still inflated compared to rents, eroding the possibility of price improvements in the near future. The New York City metro area ranked 84th-worst out of the 100 markets in his forecast, with the 2009 median home price of $416,730 expected to fall another 15.63 percent, ahead of his national forecast range of 5 percent to 10 percent. Rounding out the regional duds, Nassau County in Long Island ranked 76th, with the $368,260 expected to drop 13.14 percent and Newark, N.J. was No. 71, with the $367,380 median slated to drop 11.29 percent. [Fortune via CNN Money]
The New York City Economic Development Corporation received 29 preliminary proposals from developers for the potential 62-acre Willets Point District redevelopment project in Queens, according to an announcement released today. Seth Pinsky, president of the EDC, said that the panel is enthusiastic about the proposals received for the project, which will include 5,500 residential units and will create 18,000 construction jobs. “The quantity and quality of these responses are strong indicators that the development community has confidence in the successful redevelopment of Willets Point despite current economic conditions,” Pinsky said in a written statement. The development, situated between Queen’s Flushing and Corona neighborhoods, will be the first “green neighborhood” in the city, according to Pinsky. TRD
La Casita at 253 Smith Street in Carroll Gardens, BBQ Chicken on St. Marks and 3rd Avenue
In the Financial District, the Soda Shop has shuttered in the Cosmopolitan Hotel at 125 Chambers Street. In Chinatown, pastry chef Victoria Howe has launched an underground bakery called the Chinatown Cake Club in her three-bedroom Chinatown apartment. In Tribeca, popular Indian restaurant Tamarind has opened a location at 99 Hudson Street. A specialty cocktail bar is coming to 114 Franklin Street in the former Grace space. On the Lower East Side, Red Velvet Lounge, which will serve cocktails and cupcakes with cocktail flavors, will open today at 174 Rivington Street. A restaurant specializing in different meatball varieties may open at 84 Stanton Street. Bakery Pain d'Avignon's will open in the old Roni-Sue space in the Essex Street Market. In the East Village, a Subway sandwich shop will open in the former Downtown Music space at 342 Bowery.
A French restaurant will open in the former Ama space at 48 Macdougal Street. Cuban eatery Cienfuegos will be coming to the corner of Sixth Street and Avenue A. Michael Huynh might open a taco joint in the former Australian space on St. Marks Place and Avenue A.
Once shunned in the down market, pricey condos could be making a comeback. Dolly Lenz, vice chairperson at Prudential Douglas Elliman, and Chloe Malle, a reporter with the New York Observer, debated the issue on CNBC. Lenz argued that buyers are looking at real estate as a long-term investment, but aren’t necessarily climbing over one another to make deals. “We’re seeing a few bidding wars, but that’s not really the norm,” Lenz said. “People are looking at ‘where do I want to live?’ [and] ‘where do I want to be five years from now?’” Malle, on the other hand, said that big financial salaries are ratcheting up condo sales again, even if the kinds of homes being sold differ from the boom years. “This year bonuses are projected to be tantamount to bonuses in 2007,” Malle said. Even so, she added, buyers are “looking for more sound investments.” Reports have surfaced that condo sales are picking up, despite seasonal trends that are typically unfavorable to the winter months.
Only 31,382 troubled homeowners have received permanent mortgage modifications through Obama’s federal program, while nearly 30,650 people in trial modifications have been denied as of Nov. 30, according to a recent report released by the U.S. Treasury Department. Since the program launched in the spring, a total of 759,058 trial modifications were started, but only 4 percent of them became permanent ones. “Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications," said Phyllis Caldwell, chief of the Treasury's Homeownership Preservation Office. The lack of permanent modifications has created concerns that the $75 billion plan will fall far short of the federal mortgage modification plan introduced this spring to help up to four million delinquent homeowners.
New York City condos are seeing unseasonably high buyer interest, with buildings like RAL Companie's One Brooklyn Bridge Park and the Rushmore reportedly seeing more interested buyers in part because buyers feel the market has stabilized. After a new sales team, the Developers Group, took over at One Brooklyn Bridge Park Oct. 1, 20 new contracts were signed, with more than 100 visitors coming to look at the waterfront development each week, according to the Daily News. At the Rushmore, which has reportedly been experiencing buyer backouts, Extell Development said that 12 apartments have gone into contract over the past two months and that 11 more are in negotiation. Gary Barnett, Extell’s president, told the Daily News that buyer sentiment has improved, which is helping to move units. “The overall market has picked up, people have a better feeling that New York real estate is starting to steady,” Barnett said. “There is no new inventory, and buyers who have been looking know a good opportunity.”
The Real Deal is looking for your feedback on market-related issues. Please comment below. This question was sent by Sofia Kim, head of research at Streeteasy. If you have questions you'd like posted, please e-mail news@therealdeal.com.
From the December issue: A Boston developer has hit a few snags in its plan to build a giant residential tower. Goldman Properties wants to construct a 25-story, 232-unit apartment building and parking garage in the Fort Point Channel neighborhood that, if built, would be the tallest structure in the neighborhood. Goldman will have to make concessions in order to gain construction approval for the 315,000-square-foot development from the Boston Redevelopment Authority, the Boston Globe reported. The developer’s options include building 30 affordable housing units or donating another property for local artists displaced by the project. To sweeten the deal, Goldman has offered to pony up $900,000 to help build more parks in the neighborhood. Meanwhile, two of Nicolas Cage’s foreclosed homes, both in New Orleans, were brought to auction by Regions Bank, which had originally seized the properties. The first, a 13,000-square-foot French colonial home priced at $3.4 million this spring, sold for $2.2 million, the Wall Street Journal reported. The other, the supposedly haunted LaLaurie Mansion in the city’s French Quarter, originally priced at $3.55 million, went for $2.3 million. Cage reportedly owes the city $151,729 in unpaid taxes, which the city extracted from the deal. The actor has already shed properties in New York City and beyond, and reportedly owes the IRS around $6.3 million in unpaid taxes. Compiled by Amy Tennery
In response to a building boom that left Brooklyn with hundreds of stalled construction sites, the borough’s Community Board 6 has unanimously approved a new development policy aimed at increasing safety at construction sites by weeding out contractors with a tendency to overlook violations. Now, new construction, renovation or addition projects of 10,000 square feet or more will be subject to a special board review process, in which applicants will be asked to commit to following a series of responsible development standards, including maintaining a safe work site and having a history of good behavior. While the board, which represents Gowanus, Red Hook, Park Slope, Cobble Hill, the Columbia Street Waterfront District and Carroll Gardens, cannot force a contractor or developer out of a project, it hopes the new policy will encourage higher standards. “Too often, our community has seen developers, contractors and subcontractors who violate the health, safety, buildings, noise, and workplace laws and standards of New York City, jeopardize the health and lives of their workers, and permit dangerous and severe nuisances for adjacent property owners,” the board said in its decision. [Post]
Manhattan’s East Siders are getting shafted when it comes to being able to enjoy the island’s waterfront, according to William Oddo, a longtime Stuyvesant Town resident and former Community Board 6 member. Whereas West Siders have gained an array of water access points in recent years, from Hudson River Park to Riverside Park and their adjacent piers, the East Side has seen little development to match. Oddo, who is also an engineer, has been working to change that. After founding Stuyvesant Cove Park, which opened in 2002 between 18th and 23rd streets on the East River, Oddo has set his sights on a small pier 100 feet offshore, connected by gangways. He has applied for $825,000 in funding from the Environmental Protection Fund through the city. Oddo envisions a place where East Siders can escape from the city and from the noise of the highways. [Villager]
Following her October purchase of a 25-room Georgian mansion in Southampton, womenswear designer Tory Burch is looking to trade in her oceanfront contemporary home, now on the market for $17.9 million. The 6,000-square-foot home, set on 4.5 acres on Meadow Lane, also in Southampton, has six bedrooms, a pool and 200 feet of ocean frontage. Burch bought the property for $22.5 million from her ex-husband in July 2008 and has received approval from the town to tear down the home and rebuild a larger one in its place. While that plan hasn’t materialized for Burch, the property’s new owners would still be able to take advantage of the approved proposal for a new house if they choose. [WSJ]
1. World Trade Center Tower 4 begins to rise above ground [Downtown Express] 2. NYC's commercial buildings now required to allow tenants to bring bicycles into their offices [Gothamist] 3. With little credit available, U.S. debt grew at slowest pace on record during third quarter [24/7 Wall St.] 4. Bank of America sells historic West 54th Street townhouse for $29.4M [WSJ, 3rd item] 5. Dissatisfied with their options, Downtown parents propose their own school zoning boundaries [Downtown Express] 6. Bronx tenants protest outside bank for repairs in their University Avenue apartment building [Mount Hope Monitor] 7. Downtown Alliance looks to improve access to Financial District from Battery Park City [Downtown Express] 8. Parks Department abandons plans to expand Washington Square Park basements due to nearby burial grounds [Villager] 9. Tribeca residents want liquor license revoked at raucous neighborhood bar [Downtown Express] 10. Two more Queens schools may close at city's recommendation [NYDN] 11. New York's home foreclosures rose 70 percent in November [Business Review] 12. Department of Education holds public meeting for new Bronx elementary school [Mount Hope Monitor] 13. Rebuilding will begin soon at Bronx church targeted by arsonist [NYDN] 14. BronxWorks non-profit gets new Tremont Avenue headquarters along with its new name [Mount Hope Monitor]
1. World Trade Center Tower 4 begins to rise [Downtown Express] 2. NYC's commercial buildings now required to allow tenants to bring bicycles into their offices [Gothamist] 3. With little credit available, U.S. debt grew at slowest pace on record during third quarter [24/7 Wall St.] 4. Bank of America sells historic West 54th Street townhouse for $29.4M [WSJ, 3rd item] 5. Dissatisfied with their options, Downtown parents propose their own school zoning boundaries [Downtown Express] 6. Bronx tenants protest for repairs in their University Avenue apartment building [Mount Hope Monitor] 7. Downtown Alliance looks to improve access to Financial District from Battery Park City [Downtown Express] 8. Parks Department abandons plans to expand Washington Square Park basements due to nearby burial grounds [Villager] 9. Two more Queens schools may close at city's recommendation [NYDN] 10. New York's home foreclosures rose 70 percent in November [Business Review] 11. Department of Education holds public meeting for new Bronx elementary school [Mount Hope Monitor] 12. Rebuilding will begin soon at Bronx church targeted by arsonist [NYDN] 13. BronxWorks non-profit gets new Tremont Avenue headquarters along with its new name [Mount Hope Monitor]
Marc Holliday, CEO of SL Green, discussed strategy at the AREW luncheon at Tavern on the Green
SL Green Realty may have to reevaluate its strategy at 485 Lexington Avenue, CEO Marc Holliday told The Real Deal after the Association of Real Estate Women luncheon today at Tavern on the Green. The company had been looking to sell off 49.5 percent of its interest in the commercial office building between 46th and 47th streets before the deal fell through, according to an announcement made during an investor meeting Monday. “We’re in contract of sale, [but] the [special] servicer [CW Capital]
looks like they may be rejecting the transfer,” Holliday said after the luncheon. He would only add: “we may be having to evaluate our options.”
As for his other most high-profile dealing this week -- purchase of a construction loan at 510 Madison Avenue, a troubled Harry Macklowe tower -- Holliday was basically mum. He declined to comment on rumors that Macklowe had been gunning for a debt buy-back, and would not elaborate on the line he had shared with the audience: “We’re just a mortgage lender.” The conversation followed a largely optimistic speech by Holliday
before the AREW crowd, in which he hinted that he expects the office
market to begin a recovery in the second half of 2010 and the beginning
of 2011.
No less than 36 lenders have been able to skirt their way around violations or get away with unsafe banking practices in the past few years while holding onto their endorsements by the Government National Mortgage Association, a new joint investigation by the Washington Post and the Center for Public Integrity has revealed. Also known as Ginnie Mae, the lesser-known government-sponsored loan giant that insures mortgage-backed securities, the company was once a relatively small player on the mortgage market compared with siblings Fannie Mae and Freddie Mac. But as small lenders ran out of places to turn for financing in the wake of the housing crash, Ginnie Mae catapulted to the forefront of the mortgage market, bringing dozens of troubled, and sometimes reckless, lenders along for the ride. Sixteen Ginnie Mae-approved lenders have been cited by federal regulators for violations like unsafe banking practices or insufficient capital, and many others have been fined, sanctioned, or have Federal Housing Administration loans that are defaulting at unusually high rates, according to the investigation. Long Island-based Lend America, which just this month ceased operations after losing its FHA-approved status, received Ginnie Mae's endorsement last June despite retaining a top executive convicted of mortgage fraud and being involved in a civil suit that alleged the company was falsifying loan documents. Ginnie Mae turned nearly all of Lend America's 6,500 new loans into securities during the past 18 months.
Levi's may be moving into space 414 West 14th Street
San Francisco-based jeans retailer Levi Strauss & Co. is in talks to lease a portion of the newly-constructed 414 West 14th Street retail and office building in the Meatpacking District near the High Line, several retail sources said.
Levi's would take less than half the 6,400 square feet of the ground-floor retail space, with about 25 feet of street frontage for a high-end store, the sources said. A lease at the building would be welcome news for the six-story office and retail building built by developer Sitt Asset Management and private equity firm the Carlyle Group. The site has been vacant since it was completed in February. The opening of the High Line in June has brought more potential shoppers to the neighborhood, but pedestrian traffic remains light during the day, some brokers said.
Levi's has four locations in Manhattan, including in Soho at 536 Broadway near Spring Street and near Union Square at 25 West 14th Street between Fifth and Sixth avenues.
A spokesperson for Levi's said in an e-mail that the company was looking for space globally, but would not identify individual sites.
1. Oro condo in Downtown Brooklyn secures FHA approval [Curbed] 2. Kiefer Sutherland sells his Greenwich Village condo for $3.5 million [Berg Properties] 3. New student housing in Sunnyside, Queens to be completed in 2010 [Black Swan Blog] 4. Wells Fargo cuts principal for delinquent borrowers by as much as 30 percent [Bloomberg] 5. Nail polish company CEO Essie Weingarten buys publisher Peter Olson’s apartment at 799 Park Avenue [NYO] 6. Truce between two NJ arenas may result in surcharge for fans [NYT] 7. Luxury hotels report an increase in occupancy for second week in a row [Hotel News Now] 8. CIT Group’s shares rise as the firm emerges from bankruptcy [CNBC]
December 11th, 2009
Posted in Manhattan Real Estate Brokers, Manhattan Real Estate News, Real Estate News, Real-Estate, apts
