Abu Dhabi’s Chrysler crash

Abu Dhabi’s Chrysler crash

The Chrysler Building and Aby Rosen of RFR Holdings

Two months after the Chrysler Building was put up for sale in January, Aby Rosen, the flashy developer and co-founder of RFR Realty, emerged as the buyer behind a $151 million deal that surprised many seasoned real estate professionals.

The building’s seller, a secretive sovereign wealth fund known as the Abu Dhabi Investment Council (the Council), took an 80 percent discount on the $800 million investment it had made more than a decade earlier. The deal also marked the latest in a long history of losses by foreign buyers in New York commercial real estate, where a lack of local market knowledge can undermine even the wealthiest of investors.

“It certainly raised my eyebrows, that’s for sure,” said Michael Berretta, vice president of network development at workplace provider IWG, whose co-working business Spaces signed a lease for 111,000-square-feet at the Chrysler last September.

At just over 1,000 feet tall, the 77-story Chrysler, known for its signature spire, has stood like a silent sentry on the New York City skyline for nine decades. The Chrysler has lived several lives, from its high point as the headquarters for its developer, automobile magnate Walter Chrysler, to disrepair during the late 1970s and 1980s.

The Art Deco office tower, rescued at the time by the Massachusetts Mutual Life Insurance Company, was again brought back to life when Tishman Speyer partnered with the Travelers Group to buy the Chrysler and an adjoining building for $220 million in 1997. Tishman embarked on a three-year $100 million redevelopment of the site that added a retail pavilion to the Chrysler.

A decade later, in the prelude to the global financial crisis and with the price of oil surging, the Council swept in with an offer to buy a 90 percent stake in the Chrysler from Tishman and Prudential Financial (which owned Travelers’ former stake) in a deal that valued the building at $800 million. Tishman retained a 10 percent stake in the Chrysler as part of that transaction.

Related: The sovereign wealth shift

Compared to other recent deals involving New York landmarks, the Chrysler’s sale is microscopic. The Empire State Building sold for $1.89 billion in 2013. The Waldorf Astoria, just seven blocks north of the Chrysler, went for $1.95 billion in 2014. The Olayan Group, a Saudi conglomerate, and asset manager Chelsfield teamed up to buy the Sony Building for $1.4 billion in 2016. And Google paid $2.4 billion last year to acquire the Chelsea Market building.

But at the Chrysler, which will turn 90 in May 2020, several red flags went unnoticed. Ground lease payments to Manhattan’s private Cooper Union college jumped to $32 million in 2018 — up from $7 million the year before — and a low occupancy rate and the need for another major makeover changed the financial calculus for the Council.

“If you add all that up, it’s not worth $800 million, which is what Abu Dhabi paid for it,” said Eric Anton, an investment sales broker at Marcus & Millichap. “It’s worth what Aby paid for it. It’s simple math.”

Chrysler crunch

By Abu Dhabi’s standards, its loss at the Chrysler is a mere rounding error. The Persian Gulf emirate, one of the seven that make up the United Arab Emirates and known for its vast oil reserves, has emerged as a global financial powerhouse. Abu Dhabi is believed to manage almost $1 trillion across three sovereign investment vehicles: the Abu Dhabi Investment Authority, the Mubadala Investment Company and the Council.

In recent years the Council and ADIA have changed their investment focus toward minority investments and a less risk-taking approach, according to a 2015 analysis from financial services firm Jefferies. To double down on that approach, Mubadala and the Council merged last year, creating a superfund with an estimated $225 billion investment portfolio. As part of that merger, the two funds said they planned to streamline operations and offload assets, which could explain the Chrysler’s sudden fire sale.

“That could have been one of the stimulants to increase the sale of real estate holdings,” said Michael Maduell, co-founder and chairman of the Seattle-based Sovereign Wealth Fund Institute. He said that the Chrysler is “something they probably wanted to get off their hands.”

Another potential explanation is the ability to write off the property at 405 Lexington Avenue as a capital loss against the Council’s other U.S. holdings.

“They could use that to offset any other capital gains,” said Jay Blaivas, a real estate and tax partner at the global law firm Morrison & Foerster in New York, where he has worked with foreign sovereign investors. “They are still losing money. It’s not like it doesn’t affect them.”

Representatives for ADIA, the Council and Mubadala declined to comment for this story, as did Tishman, which is led by president and CEO Rob Speyer.

The ‘kid brother’ fund

Glitzy landmarks in the U.S. have long served as trophies for international buyers often unfamiliar with local market conditions. Such deals ramped up in the 1990s following the $2 billion that Japanese conglomerate Mitsubishi invested into Rockefeller Center after acquiring the complex in 1989 and the $440 million bet that a Dubai-based fund made in 2005 on the Essex House.

Like the Chrysler, each property racked up losses for its foreign investors.

During the height of the commodities boom a decade ago, Abu Dhabi enjoyed a $170 billion surplus thanks to its oil reserves, and the emirate could not spend cash fast enough. Under the direction of Sheikh Ahmed bin Zayed Al Nahyan, Abu Dhabi’s top sovereign investment vehicle, ADIA, was overflowing with capital, spurring the need for a new junior fund that became the Council. (Nahyan died in a 2010 plane crash.)

The “kid brother” fund, as it was dubbed by Michele Sison, the then-U.S. ambassador to the United Arab Emirates in a confidential diplomatic cable published by WikiLeaks, was initially established to make regional investments close to home. It would have no liability to Abu Dhabi’s government, thereby allowing it to invest in illiquid assets, unlike the more globally oriented ADIA.

But the Council’s domestic focus was quickly abandoned. In July 2008, it made headlines with its acquisition of a majority stake in the Chrysler, a longtime favorite of New York architectural critics and still a gleaming gem in the city’s increasingly crowded skyline. The $800 million price tag came as a pleasant surprise to Newark-based Prudential, which owned a 75 percent stake in the building on behalf of a group of German pension funds.

“They made a lot of money on that deal,” Maduell said about Prudential. “I remember talking to the gentleman who sold it, and he was really happy.”

Tishman held on to a 10 percent stake in the Chrysler and continued to manage the property. In 2017, as a reset in the ground lease approached that would more than quadruple the Chrysler’s rent, the Council refinanced the building with a $300 million loan from an entity it controlled, the National Bank of Abu Dhabi. In essence, the Council relied upon an Emirati in-house deal.

“It’s very unlikely that any other lender on the planet would have made that loan,” said David Eyzenberg, the eponymous head of New York-based investment bank Eyzenberg & Company.

Property records show the debt was paid off the day before the Chrysler was transferred to Rosen and RFR at the start of April for its $151 million purchase price.

As in any sibling relationship, the Council’s recent losses are perhaps offset by its older sovereign sister fund, ADIA, which is the world’s largest real estate investor, with reportedly more than $800 billion in assets under management.

ADIA has made some bold investments in New York real estate. It currently holds stakes in at least five buildings, including the Time Warner Center and the New York Edition Hotel. Together, those holdings are worth more than $1.4 billion, according to data from Real Capital Analytics, which noted that ADIA still ranks behind sovereign wealth funds from Qatar, Norway and China as the largest investors in New York real estate (see related story on page 34). With the Council’s recent merger with Mubadala, Abu Dhabi has reorganized both its domestic and foreign investment decision-making process.

“At the end of the day, they are reporting to the same shareholder, that being the [Abu Dhabi] government,” said William Reichert, a Dubai-based corporate and M&A partner with the global law firm K&L Gates who has been involved in deals with the Council.

A new future

As Abu Dhabi counts the costs of its investment, a new overseas firm has come in to claim the Chrysler throne. Signa Holding, one of Austria’s largest investment firms with $14 billion in real estate assets and led by 41-year-old tycoon René Benko, partnered with the German-born Rosen on the acquisition of the building, which closed in early April.

“We are thrilled that the Chrysler Building, one of the most iconic structures in the New York skyline, represents our first real estate acquisition in the U.S.,” Signa said in a statement.

While some New York developers told The Real Deal that they barely considered buying the Chrysler, there were some bids from institutional investors. Sources familiar with the matter said that the privately held Alchemy Properties sought to purchase the property, while Scott Rechler’s RXR Realty reportedly offered $150 million — $1 million less than Rosen’s bid with Signa. (Alchemy and RXR declined to comment.)

“Aby Rosen is very smart and creative. He was the first guy to mix art and real estate in the city properly and successfully,” said Anton, the Marcus & Millichap broker. “If I’m a betting man, he’s going to make this thing art, not real estate.”

 After reports suggested Rosen was considering a hotel conversion for the Chrysler, RFR’s head of marketing and design development, Sheldon Werdiger, told TRD that doing so has since been ruled out as an option. But he declined to disclose any other plans RFR might have for the building, which have reportedly included bringing back the Cloud Club, a long-defunct restaurant and private club that once filled out the Chrysler’s top floors.

“We are not there yet; we’ve only owned it for a couple of weeks,” Werdiger said. “I’ll tell you that Aby and the firm are not very patient. We are going to move on this as quickly as possible.”

But the expensive ground lease held by Cooper Union could again spoil the site’s long-term profitability — a potential outcome familiar to Rosen. In 2015, RFR defaulted on loan repayments at the glass-box Lever House when the firm was unable to refinance.

At Lever House, a ground lease whose payments are set to jump from $6 million to $20 million by 2023 spooked potential lenders. Occupancy in the building also dropped to 50 percent, per Trepp data. In February, the Lever House debt was sold to Ramsfield Hospitality Finance at a $68 million loss.

“He’s the Abu Dhabi of Lever House,” one source involved in the Lever House affair said about Rosen.

Abu Dhabi’s exit

Whether Rosen can chart a different path at the Chrysler remains to be seen. Cooper Union’s ground lease payment will again rise in 2028, to $41 million, and some reports suggest the building’s new owners will need up to $200 million to adequately refurbish the building. Property records show Rosen has started to chip away at the ground lease with a $30 million loan from Richard Mack’s Mack Real Estate Group, obtained in April.

  “You’ve got to be very careful of the ground lease, because what might look attractive today may not be in five years,” said Bernard Goldberg, a prominent art collector who in 1997 lost out to Tishman and Prudential with a bid for the Chrysler from his now-defunct hotel company, Gotham Hospitality Group. “But the price of today’s dollars can be so tempting.”

Those matters are of no concern to the Chrysler’s current tenants, who believe the property is large enough for a variety of uses. Berretta, of IWG, has had his eyes on the building for two decades, ever since IWG’s co-working company Regus moved into the office tower. Regus affiliate Spaces is now set to roll out on four floors at the Chrysler this summer.

“You speak to anyone globally, it’s known by name,” Berretta said of the building. “To have a recognizable address in New York City is of obvious importance.”

In the meantime, Abu Dhabi could reportedly find itself out of another prominent New York skyscraper it owns at 330 Madison Avenue. Vornado Realty Trust recently tapped HFF, which is poised to be absorbed by JLL, to line up a new partner for it at the 43-story building. (ADIA has a controlling 75 percent stake in 330 Madison, while Vornado owns the remaining 25 percent.) HFF and Vornado declined to discuss the matter, as did representatives for ADIA.

The sovereign wealth fund’s potential withdrawal from its investment at 330 Madison, one it has held for decades, could see the property valued at roughly $900 million, according to a report from Real Estate Alert. TRD noted in January that CBRE investment sales chief Darcy Stacom, who handled the Chrysler’s sale this year on behalf of the Council and Tishman, had also been retained to market 330 Madison. Stacom declined to comment.

With oil prices still slumping, Abu Dhabi has recently implemented some changes designed to jump-start its economy. In April, perhaps taking a lesson learned from its experience abroad, the emirate granted foreigners the right to own property for the first time in its history.

Inside the Taxi King’s collapsing empire, and his secret investment in the Brill Building

Inside the Taxi King’s collapsing empire, and his secret investment in the Brill Building

The Brill Building at 1619 Broadway with portaits of Ilan Bracha and Simon Garber (Credit: iStock and Google Maps)

A few blocks north of Times Square, the Brill Building at 1619 Broadway was once the center of America’s popular music industry. But more recently, it was at the center of an odd sequence of events that saw a group of investors bid for the entire building, then settle for a minority stake in the building, and eventually lose their entire investment to foreclosure. Two years later, at least one investor still isn’t over it.

Simon Garber

Simon Garber

“Taxi King” Simon Garber, a former associate of Michael Cohen who owns more than 200 taxi medallions in New York City, filed a lawsuit earlier this month against his attorney Boris Volfman and his firm in a last-ditch attempt to recoup his $1.75 million investment in the Brill Building. Garber claims he lost his investment due to malpractice on Volfman’s part.

“Had Defendants acted with even a scintilla of professional competence so as to effectuate their clients’ instructions, Plaintiffs would have been able to pursue the Promoters for the full amount of the Amended Guaranty (i.e., $1.75 million) and recover their investment,” the lawsuit states.

The “Promoters” are Ilan Bracha and Haim Binstock of B+B Capital, who in 2015 began raising funds for a near $300 million acquisition of the Brill Building. The bid has previously been described as involving a “byzantine” ownership structure, and Garber’s involvement was not previously reported. In fact, it may have gone unnoticed if not for two lawsuits filed in the wake of the failed venture.

Volfman declined to comment on the matter, and has yet to file a response to Garber’s latest complaint. Garber and Bracha did not respond to multiple requests for comment.

B+B’s Byzantine Brill Bid

(The structure of the Brill deal prior to Garber's investment, as described in the first lawsuit. The other three direct investors in Brill Holdings LLC - Conway, Schottenstein and Fox - are omitted from this chart.)

(The structure of the Brill deal prior to Garber’s investment, as described in the first lawsuit. The other three direct investors in Brill Holdings LLC – Conway, Schottenstein and Fox – are omitted from this chart.)

The Taxi King’s original plan was not to sue his own attorney.

Garber filed his first lawsuit over the Brill boondoggle in February 2017, one month before the foreclosure auction took place, and placed the blame squarely on his co-investors – Bracha, Binstock, three other individuals, and the LLCs involved in the deal.

“Plaintiffs never would have agreed to convert their loan to equity had they known the loan was in default,” Garber’s complaint stated, seeking damages on charges of breach of contract, fraud and unjust enrichment.

As previously reported, B+B Capital’s partners in the deal included landlords Conway Capital and Schottenstein Realty, and the Israel-based fashion chain Fox-Wizel. Each of these partners controlled one-fourth of the entity that would go on to acquire an interest in the building: Brill Holdings LLC.

But Brill Holdings’ complex structure also made room for several other secondary investors, and Garber was among them. Instead of Brill Holdings LLC, Garber’s $1.75 million contribution went to an entity known as BB Brill Manager LLC, which in turn owned a majority interest in an entity known as BB Brill LLC, which represented B+B’s 25 percent share of Brill Holdings. (See chart above.)

Got all that? Corporate complexities aside, Brill Holdings ultimately paid a total of $40 million for a 41 percent stake in the Brill Building – with the option to buy out the rest for about $56 million within 18 months. The full buyout would represent a considerable discount from the agreed-upon value of the building, pegged at $295 million, and this was largely due to the mountain of outstanding debt on the property.

The Brill Building at 1619 Broadway (Credit: Google Maps)

The Brill Building at 1619 Broadway (Credit: Google Maps)

Allied Partners and Brickman, the majority owners, had bought the entire 175,000-square-foot building for $185.5 million in 2013. Court filings show that the Brill Building was encumbered by three loans when B+B and partners acquired their minority stake: one $175 million mortgage loan and two mezzanine loans worth $35.85 million each. All three loans were originally provided by an affiliate of Brookfield Asset Management in June 2015, though city property records show that the mortgage loan was reassigned to Bank of the Ozarks (now Bank OZK) a few months later.

(Because specifics of the deal were not publicly available at the time, previous reports stated that the value of the 41 percent share was $295 million, which now appears inaccurate.)

If the owners had successfully followed through with their plans for the property, these outstanding loans may not have been a fatal issue. At the time of the closing, the owners already had a lease out with Jimmy Buffett’s Margaritaville to open its first New York location, while other deals with CVS and WeWork were in the works, which would have brought the building to 85 percent occupancy.

But none of those plans materialized in time. “Defaults subsequently occurred in connection with several loans related at the Property due to, among other things, a weak retail leasing market,” Bracha said in an affidavit.

With the building more than half vacant, Brookfield foreclosed on its defaulted mezzanine debt and took control of the property for $213 million at an auction in March 2017. After Brookfield acquired the 175,000-square-foot property, it signed WeWork to a 75,000-square-foot lease deal.

Brookfield did not respond to requests for comment and Allied declined to comment.

Penthouse Partners

According to the lawsuit, Garber was first approached by B+B in November 2015 with the opportunity to invest in Brill. A month later, Garber wired $1.75 million to B+B’s counsel to be held in escrow.

Garber and Bracha — who is also a broker and co-founder of Keller Williams’ New York franchise — soon entered into another, rather unusual type of real estate deal as well.

When Garber put his Tribeca penthouse on the market for $25 million in January 2016, his listing brokerage was none other than Keller Williams NYC. An archived listing page from the time shows that Bracha was the lead listing agent for the property, located on the 32nd floor of 101 Warren Street.

Later business disputes would make this arrangement untenable. According to StreetEasy, the Keller Williams listing was removed in August 2016, about a month after Garber — through his attorney Volfman — approved the release of his funds from escrow in order to close the Brill investment deal.

The nature of this release of funds was at the core of Garber’s dispute with B+B. According to Garber, because the new deal was “materially worse” than the original plan to buy 100 percent of the property, he was entitled to get his money back thanks to a guaranty that B+B has agreed to.

But B+B needed Garber’s funds to close the transaction, and Garber says he only agreed to release his $1.75 million on the condition that it was treated as a loan, with the option to convert to preferred equity later on.

B+B denies this, pointing to the fact that there was never any written agreement to that effect, among other things.

“This lawsuit is nothing but a misguided attempt by the Garber Parties, who were fully aware of the risks in investing in New York City real estate, especially where a large debt load is involved, to avoid sharing in the fate of the rest of their partners,” Bracha said in an affidavit.

“Each of the investors in BB Capital and BB Brill Manager, including myself and Mr. Binstock, lost their entire investment in the venture.” (BB Capital NY LLC, which represented Bracha and Binstock’s investment in the venture, contributed $3.25 million, according to court documents.)

The court sided with B+B’s interpretation, and dismissed the lawsuit last May. Garber appealed the decision soon after, but withdrew in December.

Garber now says that he would not have lost the first lawsuit if Volfman had just done his job. In the new lawsuit, he says that Volfman “carelessly and incorrectly” drafted an email that misrepresented his position, stating that “Simon has a three month [sic] to make a decision to stay as a member or be a lender.”

Even then, Garber notes that he still had a chance to save his investment by exercising the option to become a lender, but Volfman never advised him to do so: “Upon information and belief, Defendants never took these remedial steps because they were trying to conceal their previous mistakes in memorializing the Loan Agreement,” the lawsuit reads.

Meanwhile, the Taxi King’s lavish penthouse was put back on the market late last year. The property took a $3 million price cut in March and is now asking $19.5 million, per StreetEasy.

Medallion Meltdown

Ilan Bracha

Ilan Bracha

In his rebuttal to Garber’s first lawsuit, Bracha drew an interesting parallel between Garber’s taxi business and his approach to the Brill deal.

“Mr. Garber, given the nickname ‘Taxi King’ in the press based on his ownership, through entities that he controls, of a very large number of taxi medallions in both New York City and Chicago, and his cab companies are no stranger to controversy,” his affidavit stated.

“Similar to the way in which Mr. Garber has apparently improperly attempted to benefit himself at the expense of others or in violation of the law by cheating his taxi operator partners and the public, he is now improperly attempting to benefit himself and his entities at the expense of Defendants.”

In 2014, Garber’s New York taxi company, Yellow Cab SLS Jet Management Corp., was made to pay $1.6 million in restitution and penalties for unlawfully overcharging his drivers with “late fees.” That same year in Chicago, a business associate of Garber’s was charged with laundering salvaged vehicles that were then provided to Garber’s companies to be used as taxis.

Much of Garber’s taxi fleet in New York was originally co-owned with former Trump fixer Michael Cohen, with the president’s former fixer reportedly operating personal-injury law out of Garber’s Long Island City office. The two eventually had a falling-out, and Cohen scaled back his involvement in the taxi business after he began working for the Trump Organization.

The rise of ride-sharing services like Uber has not been kind to the taxi industry in New York, and Garber’s business has been no exception. As many of his loans have gone into default, the Taxi King (often identified as “Symon” Garber in court filings) is now facing a broad array of lawsuits, and in some cases even the forceful repossession of his medallions.

In an ongoing lawsuit filed against Garber in 2017, Signature Bank alleges that it is owed nearly $57 million in debt on 28 separate promissory notes secured by Garber’s taxi medallions in Chicago.

Other creditors have shown less patience. According to court documents associated with another ongoing 2017 lawsuit, Melrose Credit Union hired an “asset recovery specialist” to repossess several of Garber’s New York medallions last March.

“On March 17-19, 2018, I was part of a three man team which was operating between the hours of 1:00 AM and 8:45 AM. During those time periods, my team and I successfully repossessed seventeen (17) of the Defendants’ taxicab medallions,” an affidavit states.

“After locating the subject vehicles, we were able to gain entry to them without causing any damage by simply using a slim jim (a thin strip of metal used to unlock automobile doors without the use of a key).”

Garber says that the credit union’s actions “breached the peace” and caused damage to his vehicles. Furthermore, the taxi magnate argues the Melrose’s own reckless lending practices are to blame for the collapse of the taxi industry, which was recently documented in a 10-month New York Times investigation.

The credit union “systematically made unsustainable loans through an asset-based lending push in an effort to capture as much of the taxicab medallion market as possible from competing banks,” Garber’s counter-claim states, “which ultimately led to a collapse of the New York City market and to borrowers’ inability to make monthly loan payments.”

“Despite the presence of Uber and other TNCs [“transportation network companies”], Melrose continued its unsound practices of easy lending with no warning to the taxicab industry of the market forces at play.”

Amid financial troubles, Melrose Credit Union was eventually liquidated by the National Credit Union Administration last August. The NCUA has continued to pursue Garber and other indebted taxi operators over millions of dollars in defaulted loans.

According to data from the Taxi & Limousine Commission, Garber’s Yellow Cab SLS Jet Management Corp has been steadily bleeding medallions over the past two years – while the company managed 267 medallions at the start of 2017, that number has since fallen to 211. The past month has been particularly tough for the company, with a loss of more than 30 medallions since early April.

Meanwhile, the taxi industry’s biggest rival, Uber, saw a record-breaking 11 percent dollar loss on its first day of trading last Monday. Lyft, which debuted in March, is also trading more than 30 percent down from its initial price.

That picture you took at The Vessel? Related owns it.

This Airbnb-backed startup is opening a New York location this fall

Mayflower files for 25-story Garment District hotel

Extell just went public with Central Park Tower listings

Extell just went public with Central Park Tower listings

Sales officially launched in October 2018

Seven months after launching sales at the most expensive condominium project in the city’s history, Extell Development has publicly listed the units at Central Park Tower.

In a departure from a trend among developers who never release listings publicly, the Gary Barnett-led firm listed seven units ranging from a two-bedroom that’s asking $6.9 million to a five-bedroom asking $63 million. The latter spans 7,074 square feet and has estimated monthly common charges of $10,587 plus monthly real estate taxes of $19,619.

With 179 luxury condos, the project at 217 West 57th Street has a projected sellout of more than $4 billion — making it the priciest condo project in New York City to date. At 1,500 feet, it will also be the tallest residential building in the world.

There are 20 condos priced above $60 million, including a penthouse that will ask $95 million, according to the project’s offering plan. Residences start on the 32nd floor, above a seven-floor Nordstrom and Central Park Club, a 50,000-square-foot amenity space across three floors that will feature billiards, a screening room, a basketball court and a 60-foot outdoor pool with cabanas.

Extell launched sales last year, several months after getting the green light from the New York Attorney General’s office. It’s unclear how many units Extell has sold to date; under terms of its $1.4 billion in financing, the developer must sell $500 million worth of units within three years.

In recent years, developers have opted to keep listings close to the vest — a tactic that’s made it harder to track sales volume at a time when the luxury market is soft. Vornado Realty Trust has not listed any active listings at Central Park Tower. Three rentals are currently listed on StreetEasy, however.

Here’s the next major resi development headed to Far Rockaway

CW Realty files plans for 13-story building in Bushwick

Does Extell’s new incentive at One Manhattan Square top them all?

Samvir Sidhu sues over squashed contract to buy Yorkville property

Samvir Sidhu sues over squashed contract to buy Yorkville property

Plaintiff is trying to build an assemblage at the First Avenue site

Megalith CEO Sam Sidhu and 1660 First Avenue (Credit: Tobias Truvillion and Google Maps)

An apparent affiliate of Samvir Sidhu’s Megalith Capital Management is suing the property owner of a Yorkville walk-up he’s trying to buy.

Suncore Group SA, LLC — of which Sidhu is the principal — alleges in its complaint that the owner of 1660 First Avenue wrongly scrapped Suncore’s contract to acquire the four-story mixed-use building.

Suncore, which had wanted an extension to close the deal that wasn’t granted, alleges that the owner did not negotiate in good faith.

“Hopefully there will be a resolution of it [the case] that’s satisfactory to both sides,” said Kevin Nash of Goldberg Weprin Finkel Goldstein, LLP, who is representing the plaintiff.

Megalith and representatives for the defendant entity, 1660 1st LLC, did not return requests for comment.

Suncore has been working to build an assemblage along First Avenue, according to the complaint, which was filed Monday in New York County Supreme Court. The company went into contract on the 1660 property, which sits between east 86th and 87th streets, in February for $12.5 million and provided a down payment of $937,500.

Nash said the company wants to acquire three or four properties for a new development, though he did not specify further.

But as the May deadline to close approached, Suncore asked the owner of 1660, whose principal the complaint identifies as Anthony Ventura, for an extension, the complaint states. Suncore has been having trouble closing on an adjacent property — null — and for an unspecified reason, Suncore wanted to close on both acquisitions around the same time, the filing states.

But with no guarantee in hand, Suncore took a precautionary step: It prepared to file for bankruptcy the day of the closing, should Ventura not give Suncore more time to close, the filing states. This is because Suncore knew that by filing for bankruptcy, Suncore would get an automatic 60-day extension to close, according to the complaint.

Nash said that filing for bankruptcy is a “very viable, available option” in such a case.

“To take true advantage of it, you have to get the case through bankruptcy within 60 days, which is possible. Tight, but possible,” Nash said.

At the closing meeting, Ventura allegedly asked Suncore not to file for bankruptcy and the two decided to negotiate again the following day, after the technical deadline. In the end, negotiations fell through, and the owner eventually found Suncore in default of its contractual obligations because it did not close on the deadline, the filing states.

Suncore now wants a judge to void this voiding of the contract, because Ventura allegedly did not negotiate in good faith and deprived Suncore of a chance to file for bankruptcy.

“They thought they were going to get an extension the following day,” Nash said.

Suncore also gets technical in its complaint, by alleging that the deadline date and time — May 6, 2019 at 6 p.m. Eastern Standard Time — actually doesn’t count.

That’s because at that moment, New York — and the rest of the U.S. Eastern seaboard — operated under Eastern Daylight Time.

“Because a time of the essence provision can trigger a forfeiture of important contract rights, it must be precisely worded,” the complaint argues.

Izaki Group is doubling the size of its Yorkville condo project

US authorities list Jho Low’s LA spec mansion amid 1MDB scandal

Trio of Manhattan buildings up for sale following claims of mismanagement

Empire State Realty Trust’s CFO David Karp is stepping down

Empire State Realty Trust’s CFO David Karp is stepping down

The executive is resigning for “personal reasons”

Empire State Realty Trust’s David A. Karp

Empire State Realty Trust’s top beancounter is stepping down, the firm announced Tuesday.

David Karp, who has held the chief financial officer role since 2011, is resigning for “personal reasons,” the real estate investment trust said. The move is effective Aug. 1.

The REIT’s chief accounting officer and treasurer, Anthony Prentice, will serve as acting CFO as the company searches for a permanent replacement. COO John Kessler will lead that team during the transition.

Karp, in the company’s statement, said he oversaw the firm’s transition from private partnerships to a public REIT.

“While it was a difficult decision for me to make, I leave ESRT with a strong balance sheet and financial team in place. I am thoroughly engaged in the plans for transition and know the Company is well-prepared for the opportunities ahead,” said Karp, who added that he plans to relocate to the West Coast, where he’s from.

Karp also has held executive-level roles at real estate private equity firm Forum Partners Investment Management and Falcom Financial Investment Trust, also a public REIT.

In the first quarter, ESRT, which owns the Empire State Building, reported net income attributable to stockholders of $5.7 million, down from $9.8 million year over year. Anthony Malkin has been CEO since 2013.

Going green has some city landlords seeing red

HUD Secretary Ben Carson confuses REO with Oreos in congressional hearing

HUD Secretary Ben Carson confuses REO with Oreos in congressional hearing

HUD Secretary Ben Carson confuses REO with Oreos in congressional hearing

Carson could not explain what the common foreclosure term stood for

May 21, 2019 05:09PM

Ben Carson (Credit: Getty Images and iStock)

Milk’s Favorite Cookie, better known as Oreo, took center stage in a congressional hearing Tuesday morning.

Housing and Urban Development Secretary Ben Carson could not come up with a definition for the common real estate foreclosure term, REO, instead confusing it with the tastier alternative, Oreo cookies.

REOs, Rep. Katie Porter pointed out, is an abbreviation for “real estate owned.”

The California Democrat was attempting to ask Carson about the difference in REO rates between Federal Housing Administration loans and Fannie Mae or Freddie Mac loans. When she asked him if he knew what an “REO” is, he responded, “an Oreo?”

Carson was able to come up with two out of the three words in the acronym, incorrectly stating that “REO” stands for “real estate organization.”

Like most political slips of this kind, the exchange is now trending on Twitter. After the hearing concluded, Carson tweeted a photo of himself with a pack of Double Stuf Oreos he sent to the congresswoman.

(Credit: Twitter)

(Credit: Twitter)

Carson, a former Republican presidential candidate, is exploring the option of staying on for a second term as secretary, he previously told The Real Deal. He’s met opposition recently over his department’s plan to roll back subsidies for low-income residents and undocumented immigrants. [BI] — Natalie Hoberman

Yes No