20-NOV-09

Group of residents at Rector Square sue over condo conversion

A suit was filed in New York State Supreme Court yesterday by 45 owners of condominium apartments at Rector Square, a 304-unit building at 225 Rector Place in Battery Park City, against YL Real Estate Developers, Michael Shvo and Cooper Square Realty.

Mr. Levy had acquired the former rental building, which had been known as Park Place, from Related Companies in 2006 for $165 million. The transaction that also included Columbus Green, a rental building that was converted to a condominium known as Park Columbus at 101 West 87th Street.

Earlier this year, Anglo Irish Bank foreclosed on the Battery Park City property.

Mr. Shvo is a real estate broker who was involved in sales at the building and Cooper Square managed the building.

According to an article by David Jones in today's edition of therealdeal.com, the suit charges that YL Real Estate Developers, which is headed by Yair Levy, failed to complete promised construction, failed to make payments to the Battery Park City Authority and diverted reserve funds for Mr. Levy's own use.

The suit also charges it, Mr. Shvo and Cooper Square with fraud, negligence and misrepresentation, according to the article.

The suit also alleged that in violation of the authority's regulations, Mr. Levy sold some apartments to an Italian university for dormitory use by exchange students and rented out apartments to Marriott as extended-stay hotel rooms.

The building was erected in 1986 by Related Companies and designed by Sampton Gruzen Steinglass.

Related had received tax breaks when it erected the building in exchange for making 20 percent of the units available for moderate-income tenants and in 2002 Related extended that protection to the year 2019 as an inducement for people to stay in the building after the terrorist attacks of September 11, 2001 as it was one of the closest in Battery Park City to Ground Zero.

After paying off a mortgage of the Housing Finance Agency, Mr. Levy argued that the provision of rent controls for the moderate-income units no longer applied. While most of the market-rate tenants in the building vacated as their leases expired, the tenants in the moderate-income units remained.

17-NOV-09

Group acquires $40 million note on planned apartment tower at 303 East 51st Street

HFZ Capital Group, a partnership of Tamir Sapir of the Sapir Organization, Ziel Feldman. Chairman of Polar Investments, and Acro Real Estate of Israel has acquired a $40 million note on the planned apartment tower at 303 East 51st Street from Arbor Realty Trust.

An article in today's edition of therealdeal.com by Avihu Kadosh said that "The original developer, Kennelly Development Company LLC, which is headed by James P. Kennelly, had invested more than $110 million for the defaulted project, according to sources."

In June, 2008, the Department of Buildings revoked the building permit for the tower under construction at 303 East 51st Street where a crane crashed and killed seven people in March. Work had been stopped at the site since the collapse.

A June 14, 2008 article by William Neuman and William K. Rashbaum in The New York Times said that "officials said that revised plans recently submitted by the developer did not resolve zoning violations that had led the city to question the project's status even before the crane accident on March 15."

Plans for the 117-unit condominium tower at 303 East 51st Street had changed. Initial plans called for the development site called for a 40-story building highlighted by pilasters but they were revised by architect Garrett Gourlay so that the tower would be 43 stories and clad in a "silvery" glass with many balconies, the fronts of which would be angled slightly differently to created not a fractured effect but one that adds a vertical dynamic to the facades.

"Residents in the area around the East 51st Street building where the crane crashed into the street had long complained about the planned 43-story tower being built by Mr. Kennelly," the Times article stated, adding "But it was not revealed publicly that the city also had reservations until after the accident when Patricia J. Lancaster, then the buildings commissioner, said that the project did not conform with zoning regulations and that it never should have received permission to be built as it was designed."

Ms. Lancaster would later resign because of the controversy.

"On May 20," the Times article continued, "the city sent the developer a letter, spelling out numerous ways that his plans did not meet zoning requirements, including problems with the configuration of the tower and how square footage was calculated. He submitted revisions, but the city said they were not enough to bring the building into compliance, which led officials to revoke the permit -- an action rarely taken on high rise projects in Manhattan."

Work has been stopped at the building site, at 303 East 51st Street, between Second and First Avenues, since the collapse.

Today's article indicated that 19 of the building's 30 stories have been completed and that it should be completed within a year and a half. The article also said that Ziv Yaakobi, the chairman of Acro, which is making its first investment in this country, said that it estimated that it bought the rights to the building at a 30 percent discount.

Kennelly Development's other residential projects included Block Hall at 21-23 South William Street in the Financial District, a recent conversion of a Tudor Revival-style former club building, and the Sycamore at 250 East 30th Street, a recently completed new condo apartment building.

17-NOV-09

Abu Dhabi concern has acquired majority stake in Extell's plans for 157 West 57th Street

Khadem al Qubaisi, the chairman of Aabar Investment, a company controlled by the Abu Dhabi Government, has confirmed that his company has acquired a majority stake in Extell Development's planned mixed-use project at 157 West 57th Street across from Carnegie Hall, according to an article published today by Bradley Hope in The National, the English language newspaper in Abu Dhabi.

Mr. al Qubaisi said that the detail with Extell could be the start of several property projects in New York, the article said, adding that "Last year, the sovereign wealth fund Abu Dhabi Investment Council bought a 75 per cent stake in the iconic Chrysler building in midtown Manhattan."

A partial building permit was issued by New York City for the project September 24, 2009 for a 73-story, 953-foot-high project with a total of 1,493,514 square feet. The permit indicated that the mixed-use project would include 150 apartments and a "schedule A" on file with the Department of Buildings indicated that it would have attended parking for 64 cars, a hotel on the lower 20 floors, and apartments on floors 22 through 46, 48 through 72.

James Davidson of SLCE Architect was the architect who filed the papers and Christian de Portzamparc is the design architect. His design has not been publicly shown but Mr. Hope's article said that Gary Barnett, the head of Extell, said the 57th Street development would be "very unusual" and "one of the greatest buildings in the last 50 years" because of its prime location and ambitious design. Mr. Portzamparc is the architect for several Extell projects further west and close to the Hudson River.

Extell has another major development site nearby further west on 57th Street.

The tower at 157 West 57th Street would be taller than the tall trio of skyscrapers just to the south: Carnegie Hall Tower and Metropolitan Tower on 57th Street and CitiSpire on 56th Street.

16-NOV-09

New rental building at 1510 Lexington Avenue will ban smoking

Kenbar Management announced today that its new 298-unit rental apartment building at 1510 Lexington Avenue, which opens next month, will ban smoking on and in its premises.

"The feedback from prospective residents has been overwhelmingly positive," Neal Sigety, a partner in Kenbar Management LLC, developer of 1510 Lexington Avenue, said in a press release.

"In our years of experience as developers and owners of New York City apartment buildings, we've seen a growing demand for a healthier lifestyle at home as well as in the workplace. We're responding to a trend we see all around us," he added.

This 18-story rental tower at Lexington Avenue and East 97th Street is seeking LEED Silver certification and is one of three rental buildings developed by Kenbar that comprise "Carnegie Hill Place." All three have been designed by SLCE Architects and are managed by Rose Associates.

1510 Lexington will offer 298 studios, one, two and three-bedroom apartments ranging from 450 sq. ft to 1,300 sq. ft. The building will have 24/7 concierge services, water filtration, a garage with valet parking, bicycle and personal storages and a package room with refrigerated storage for deliveries.

Apartments will have triple-plane windows, Bosch washers and dryers, KitchenAid stainless steel kitchen appliances and dual flush Kohler toilets.

The building will also have a children's playroom, a caf? and lounge with a fireplace overlooking a garden, a roof garden with indoor and outdoor fireplaces and a fitness center.

Rents for apartments at 1510 Lexington Avenue will start at: $2250. All apartments at 1510 Lexington Avenue will be subject to rent stabilization.

Cornelius E. Sigety and Kinne S. Yon, the brother and sister owners of Kenbar Management LLC, developed two other multi-use buildings that make up Carnegie Hill Place: 1501 Lexington Avenue and 1500 Lexington Avenue.

An article by C. J. Hughes in today's edition of The New York Times noted that "the Related Companies will ban smoking at some of its downtown apartment buildings because of health concerns about secondhand smoke, according to company officials" although smokers already living in the properties will not be affected. The article also said that Pan Am Equities began asking new renters at its buildings about 18 months ago not to smoke and a spokesperson for Pan Am said the company had not "had any negative feedback." The article also quoted a lawyer for the National Multi Housing council that about 50 public housing agencies have now forbidden smoking.

13-NOV-09

FHA's reserves dwindle and it tightens its regulations

The Federal Housing Administration (FHA) announced yesterday that its cash reserves had declined significantly in the last year and that it was therefore tightening its loan standards.

It released to Congress an annual independent audit that indicated that its reserves were now 0.53 percent of its total portfolio, far below the 2 percent mandated minimum set by Congress.

The audit indicated that the agency "has sustained significant losses from loans made before 2009, and the capital reserve ratio has fallen below the congressionally mandated threshold, but concludes that under most economic scenarios considered FHA's reserves would remain above zero."

The lead article in today's edition of The New York Times by David Streitfeld said that "in 2007, just before housing prices began their worst slump in decades, the reserves were above 6 percent," adding that "Ann Schnare, a consultant who has analyzed the F.H.A. balance sheet, put the situation this way: 'They're running on empty.'"

In a statement, David H. Stevens, the F.H.A. commissioner, said that "there are real risks to the FHA and we are aggressively addressing those real risks with real reforms."

"The volume of FHA insurance guarantees has increased since 2008, as private sources of mortgage finance have retreated from the market. Nearly 80 percent of FHA's purchase-loan borrowers in 2009 were first-time homebuyers. In the second quarter of 2009, nearly 50 percent of all first-time buyers in the entire housing market used FHA-insured loans. The new lending is being done as FHA has halted the seller-financed down payment assistance program, tightened underwriting standards on streamline refinances, increased oversight of lenders, and is considering additional prudent measures," the agency's statement maintained.

"The quality of new loans insured by FHA has improved on several metrics," it continued, "including average borrower credit score: the average borrower FICO score today is 693 compared to 633 two years ago."

The audit noted that the agency "insured 995,590 purchase loans and 836,528 refinances in FY 2009, almost 30 percent of total purchases and 20 percent of total refinances in the housing market."

According to the Mortgage Bankers Association National Deliquency Survey for the Second Quarter of this year, illustrated in the accompanying chart, subprime deliquencies of more than 90 times climbed from about 6 percent in the second quarter of 2005 to about 27 percent in the second quarter of this year while FHA deliquencies in the same period climbed only from about 5 percent to about 7.5 percent and prime deliquencies from less than 1 percent to more than 5 percent.