Harry Macklowe and 220 East 59th Street
Harry Macklowe is offloading his stake in a Midtown tower, while he attempts to build another one.
The 82-year-old is departing 200 East 59th Street, The Real Deal has learned. His capital partner in the building, Singapore-based Alpha Investment Partners, is buying his stake in the 35-story Upper East Side condominium tower.
“In accordance with our business plan, we are now focusing our efforts on other upcoming projects,” a spokesperson for Macklowe Properties said in a statement. “We know Alpha will be a fantastic steward of this property.”
The transaction has not yet closed, people familiar with the matter said. Alpha declined to comment.
The move comes as Macklowe attempts to assemble a Midtown parcel of land for another skyscraper, Tower Fifth, which, if completed, would stand over 1,500 feet tall. In October he secured a $192 million loan from Fortress to refinance the site. But plans for the tower have been put on hold as Macklowe has tried unsuccessfully to buy the Venezuelan consulate, which currently sits on the block, between East 51st and 52nd streets, and Madison and Fifth avenues.
At 200 East 59th, Macklowe purchased the development site in 2014 from SL Green, financed with a $64 million acquisition loan provided by Singapore’s United Overseas Bank. After pre-development was completed, the partners obtained a $116 million construction loan from UOB in 2016. The partners were seeking a $264 million sellout of the building, with 68 units.
Macklowe’s stake in the building was valued at $4.8 million, according to December 2017 filings from his divorce proceeding with his ex-wife Linda. After the divorce, 35 percent of the stake was granted to Linda.
The building had come to resemble Macklowe’s comeback after much of his commercial real estate portfolio was wiped out following the financial crisis. In 2008, he sold his trophy asset, the General Motors building, to Boston Properties for $2.9 billion. This helped him pay off debt to Fortress, which had financed his $7 billion acquisition of Equity Office Portfolio.
While many apartments in the building remain unsold, residents are expected to move-in in coming months.
In recent years, Macklowe has gone through a bitter divorce from Linda, with whom he was married for more than 60 years. Their settlement last year effectively split his wealth in half, which Forbes this month estimated to be valued at close to a half billion dollars.
The divorce settlement shed light on the value of Macklowe’s other commercial real estate holdings, valued before the settlement. At 1 Wall Street, an office-to-condo conversion where he secured a $750 million construction loan last year from Deutsche Bank, his ownership was valued at $7.4 million. At 432 Park Avenue, the 1,396-foot-tall Midtown tower he developed with CIM Group, Macklowe’s stake in the residential condominium was valued at $2.5 million, while his ownership of the retail portion was zero.
The facade of 432 Park Avenue this year served as a canvas for portraits of Macklowe and his new wife, Patricia Landeau, which have since been removed.
Earlier this month he made headlines after being skewered by the Village of East Hampton council for doing construction work and destroying wetlands on a property he owns there without a permit. The move rekindled memories of the time he destroyed four Times Square buildings in the middle of the night in the 1980s, without permission.
Natasha Page and Jason Walker
A Douglas Elliman broker who alleged that a former mentee tried to steal his clients is now being accused by her of discrimination.
Jason Walker faces allegations in a lawsuit filed Tuesday by Natasha Page that he “repeatedly made derogatory and offensive comments” to her when they were at another brokerage, CORE. Page charges that Walker called her a lesbian and a “mulatto” and said he didn’t want to hire a Latina assistant because “Latinas may be quick to give an attitude.”
The case is the latest chapter in a legal fight between Walker and Page that has dragged on for more than two years. Steven Landy, an attorney for Walker, said there was no truth to the latest allegations and noted that a lawsuit previously filed by Page had been dismissed. He said the case has “many deficiencies.”
“[Walker] took Miss Page under his wing,” he said. “This is how she’s chosen to repay his kindness. It’s pretty regrettable.”
Page filed a nearly identical complaint in December 2018. It was dismissed in May 2019, though the judge’s order at the time indicated that Page could refile. Both the dismissed case and the new one assert that Page had no formal connection with CORE and was instead an employee of JWalker Realty. However, exhibits filed in the initial lawsuit indicate that she was employed by CORE Marketing Group even beyond October 2016, when she alleges Walker quietly fired her from his eponymous brokerage. As of July 2019, Page’s agent license was affiliated with Stillwater Real Estate and Property Group, according to court documents.
Page’s lawsuit claims she was only paid “inconsistent commissions” despite taking on the responsibilities of Walker’s assistant. When she approached Walker about being paid an assistant’s full salary, he told her he wouldn’t be rushed into doing so and could “easily replace her,” according to the lawsuit. He also allegedly joked that she should “date a homosexual male office manager at CORE, who could be ‘the girl in the relationship.’”
The lawsuit details a two-day filming session of the television show “Million Dollar Listing.” Walker had Page play his assistant because, he allegedly said, “the show needed some color” and that she was “filling the minority quota, being that she was African American and a lesbian.”
The suit charges that Walker also said he wanted to “put an afro wig on an inflatable union rat, and place it outside the office of a black/African American CEO of Jason’s former employer.”
Walker left Elliman in June 2015, then returned a year later. He’d been fired by CORE roughly a month before Elliman rehired him. Before CORE, he’d been terminated from Compass. In a May 2016 lawsuit, Walker accused Compass of wrongfully firing him and withholding $170,000 in commissions. He also accused the firm of spreading false rumors that he’s a misogynist. That case was discontinued in November 2018.
In 2017 Walker sued Page, alleging that she spread lies about him to “undermine his relationship with his clients” and misappropriated his contacts list in an attempt to poach clients “as a shortcut to developing her own network of clients and referral sources.” That case is ongoing. In her latest lawsuit, Page alleges that the 2017 lawsuit was an attempt to “chill” her discrimination claims.
Elliman declined to comment.
Aby Rosen and Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)
Beware of competitors offering to help you out.
That is the lesson of a lawsuit filed Tuesday by RFR Realty founders Aby Rosen and Michael Fuchs against Philip M. “Tod” Waterman III over the ground lease to the prestigious Lever House building on Park Avenue.
RFR Realty entered into a ground lease for the famed property in the late 1990s and has had trouble with it since at least 2015, when the company defaulted on a $110 million loan on the Midtown site. Brookfield Properties and Waterman Interests wedged their way into the situation in 2018, but the suit argues that Waterman did so fraudulently.
With RFR having sunk tens of millions of dollars into the building over the years and facing tricky negotiations to renew its lease, the plaintiffs claim, Waterman emailed Fuchs in January 2017: “Should we talk about Lever? Makes no sense to me…maybe we can help? If not, I will keep completely away from this.”
Fuchs agreed to discuss RFR’s plan if Waterman kept it confidential, according to the lawsuit. Waterman agreed, and Fuchs told him sensitive information including his financial status and strategy for the lease negotiations, the suit says.
RFR claims that Waterman used the information he learned from his discussions with RFR to “negotiate separate and secret agreements” with the owners of the land under 390 Park Avenue, the Korein family.
Waterman and Brookfield created a new ownership entity called a “sandwich lease” between the Koreins’ stake and RFR’s ground lease, which effectively made Waterman and Brookfield RFR’s new landlord.
“Armed with all the confidential information supplied to him by Fuchs, Waterman covertly angled to insert himself as [RFR’s] landlord and improperly used the very information that Fuchs had shared with him in confidence,” the lawsuit reads.
Rosen and Fuchs were notified in July 2018 that Waterman was now their landlord, according to the suit. Instead of seeking terms with the Koreins, RFR would have to negotiate a lease with Waterman.
Waterman and attorneys for Rosen and Fuchs did not respond to requests for comment. The Korein family could not be reached.
The suit accuses Waterman of fraud and unfair competition, and Waterman and the Korein family of breach of contract. It asks the court to ban Waterman from lease negotiations and for damages to be determined at trial.
220 Central Park South (Credit: Getty Images)
Vornado Realty Trust’s 220 Central Park South has closed another pricey sale.
Unit 49A, which has five bedrooms and six bathrooms, sold for $64.1 million, according to property records filed Tuesday. That’s more than $9,700 for each of the unit’s 6,591 square feet.
The buyer, an entity named K & J Assets, is linked through mortgage documents to an address at a housing complex in Hong Kong. The documents show it took out a $37.8 million mortgage.
Scott Segal, the authorized signatory on the deed, declined to comment on the sale.
The closing is the third at 220 Central Park South to appear in public records in a little over two weeks, following sales recorded in late October of $55 million and $61 million. Other high-end transactions at the address in recent years include purchases by British musician Sting and hedge funder Ken Griffin, who dropped a record $238 million for the penthouse in January.
It’s possible that the person or persons behind K & J Assets will never be disclosed to the public. Anonymous buyers at the building were briefly at risk of having their identities revealed, after the state tax department determined a new LLC transparency law applied to condo purchases, causing panic in New York City’s real estate industry. Under the law, buyer information might have been accessible through freedom of information requests.
However, the state tax department last week reversed its position, explaining that the law was not intended to apply to apply to condos. “The Department’s initial understanding of the new law was generated based on the agency’s preliminary reading of the bill language and how it interacted with other relevant sections of the law,” a representative of the state tax department said in an email. “Since that time, the bill sponsors have clarified their intent.”
Vornado markets the building as having views of Central Park from every residence, and “a unique architectural composition featuring an intimate 18-story Villa and 79-story tower.”
Write to Sylvia Varnham O’Regan at [email protected]
Clockwise from left: 5203-5207 Church Avenue in Brooklyn, 119-40 Metropolitan Avenue in Queens, 855 East 217th Street in the Bronx and 31-35 Steinway Street in Queens (Credit: Google Maps)
A portfolio that includes a sizable chunk of rent-stabilized apartment units is hitting the auction block.
Bids for the 10-property portfolio, which includes one parcel upstate, could serve as a temperature check for investor interest in rent-stabilized product after the state’s sweeping rent law was passed this summer.
The six multifamily and mixed-use buildings up for sale include 855 East 217th Street in the Bronx; 553 58th Street, 171 Bay 17th Street and 1314 Sterling Place in Brooklyn; and 235 East 96th Street and 117 West 111th Street in Manhattan. Altogether the properties have 103 rental units, most of which are stabilized, according to Paramount Realty USA, which is handling the auction.
“It’s no secret that prices for rent stabilized investment properties have been affected by the recent legislation,” Paramount owner Misha Haghani said in a statement. “The question is, to what extent? That’s what we aim to answer through this formal bidding process.”
The multifamily market saw dollar volume, deal volume and building volume fall by double digits on a quarterly and year-over-year basis after Albany’s new rent law, according to a recent report from Ariel Property Advisors.
The remaining portfolio includes one vacant commercial building in Brooklyn at 5203-5207 Church Avenue, one vacant retail building in Queens at 31-35 Steinway Street, one community facility in Queens at 119-40 Metropolitan Avenue and one 63-acre development site on Milk Road in Woodridge.
Public records indicate that most of the New York City properties were owned by the Daniel Group, a Queens-based landlord. The Church Avenue site was owned by an entity tied to Raymond Eshaghoff, and the Metropolitan Avenue appears to have been tied to Arthur Steinberg.
Paramount’s estimated values of the properties range from about $1 million for a three-story brownstone in Crown Heights on Sterling Place to about $6.5 million for the empty retail building in Queens, which used to house a Victoria’s Secret. Up to 52 homes could potentially be built on the development site upstate, according to Paramount. The vacant commercial building in Brooklyn was previously asking for as much as $5.8 million but now has a suggested value of just $2.9 million.
Written bids for the properties are due on Dec. 10.
Paramount previously helped auction off the childhood home of Donald Trump in Queens at 85-15 Wareham Place, which sold in 2017 for $2.14 million, reportedly to a female Chinese buyer.
Clockwise from top: Robert Shapiro, Viktor Gjonaj, and Robert C. Morgan (Credit: Rochester Institute of Technology, LinkedIn, iStock)
On October 15, developer Robert Shapiro—who pleaded guilty in August for leading a $1.3 billion real estate Ponzi scheme—received the maximum sentence of 25 years in prison. Drawn out over two years, the court case laid bare how his now-defunct Sherman Oaks-based investment firm, the Woodbridge Group of Companies, defrauded more than 7,000 investors, among them many elderly retirees and ABC News anchor George Stephanopoulos.
Certain elements of Shapiro’s flagrant self-enrichment scam may be especially standout—he stole somewhere between $25 million and $95 million and spent at least some of the money on expensive wine and Picasso works—his fraudulent behavior is hardly an outlier within the industry. In the decade since Bernie Madoff first made headlines, Ponzi schemes have proliferated: The SEC has prosecuted 50 percent more of these cases in the last 10 years, many of which are tangled up with real estate. In fact, the Woodbridge scam isn’t even the only one that made headlines this year. Check out these five other examples from 2019 alone.
1.) Back in May, the SEC charged upstate New York residential and commercial real estate developer Robert C. Morgan and two of his business operations with fraud for siphoning and misusing investor funds. According to the complaint, Morgan—whose company, Morgan Management, at the time included 140 properties and 34,000 units across 14 states—raised more than $110 million from 200 mostly small investors starting in 2013, funds he claimed that would be used to improve multi-family properties while, in reality, were diverted to pay back earlier investors, prosecutors said.
The SEC also alleged that Morgan had directed more than $11 million to repay an inflated, fraudulently-obtained loan for an unrelated apartment complex, while additional charges filed by the Justice Department accused him of conspiracy to commit bank fraud, wire fraud, and money laundering. In the months since the indictments, Morgan has shed properties, most recently selling about half his portfolio to Pennsylvania-based company called Morgan Properties, which is reportedly separate and unrelated to his own entities.
2.) In August, Carl Chen, the owner of Delaware-based real estate company Chenmex, was sentenced to 51 months in prison after pleading guilty to fraud in relation to a multi-year Ponzi scheme. Between 1991 and 2017, Chen collected a total of $6.4 million from 41 investors according to court documents that also revealed that he “generally promised investors annual returns of 10 to 15 percent and signed a promissory note guaranteeing each investor interest-only payments on a monthly basis until such time as he paid back the investor his or her full principal investment.”
In 2013, Chen’s holdings could no longer float the interest payments to investors and the scam began to cave in. In 2016, as investors began to demand their money back, Chen offered a mortgage on his own home in exchange for an investor not demanding immediate repayment; the following year, he filed for Chapter 7 bankruptcy, seeking to discharge the $6.7 million lent to him by investors. The judge who sentenced Chen this summer called the case “one of the most horrendous white-collar offenses that I remember seeing.”
3.) This Ponzi scheme has a mystery element: Detroit commercial real estate developer Viktor Gjonaj disappeared this summer in the wake of multiple mounting lawsuits—one of which alleged that he stole from investors, including his wife, in a multi-million dollar pyramid scheme. Gjonaj was accused of doctoring purchase agreements in order to make investors believe they were buying ownership interests in properties in Southeast Michigan that were actually already owned by the investors.
There was a web of more than 30 companies “all designed for the sole purpose of defrauding investors and keeping the money hidden,” according to court documents cited by Crain’s Detroit Business. Gjonaj’s business partner, Gregory Vitto, was initially named in one suit, but has since been dismissed. He claims he was merely another victim: “I was used just like the rest of the people,” Vitto wrote in in text message to Crain’s. “He owes me a ton of money also.” As of mid-September, Gjonaj had been heard from but remained out of sight.
4.) In September, the SEC charged Chicago property developer Glenn C. Mueller and his companies with violating federal securities laws, alleging that his “fix-and-flip” real estate investment pitch was in actuality a $41 million Ponzi scheme. Mueller is accused of defrauding more than 300 investors over the past five years, many of whom were retirement age, claiming that their money would be used to buy and renovate apartment buildings across the state when actually Mueller used the money from new investors to pay off existing others. While the SEC appointed a federal equity receiver to take control of Mueller’s businesses and marshal assets to benefit his victims, it remains unclear if they will all get their money back: While his main company, Northridge Holdings, is estimated to be worth $100.4 million, liabilities exceed $113 million.
5.) Meanwhile, in Utah, former real estate investment guru Rick Koerber was convicted on 15 charges of fraud, wire fraud, and money laundering following 10 messy years of litigation by federal prosecutors. He was ultimately sentenced to over 14 years in prison. Koerber collected more than $100 million in investments from family and friends between 2004 and 2008, claiming the money would be used to purchase real estate but instead using the funds to support a lavish lifestyle as well as a hamburger franchise and a sexy horror film production. He was also accused of using money from new investors to pay previous investors in order to keep up the scam.
The Koerber case has been particularly contentious for the way he exploited fellow followers of the Church of Latter Day Saints. “He knew exactly what to say and do to get members of the Mormon community to trust him. He spoke their language,” federal prosecutor Tyler Murray said during the trial. Prosecutors pushed for a 20-year prison term; ultimately, Koerber was sentenced to 14 years and change. It is estimated his investors lost a total of $45.2 million.