An August 13, 2010 article at therealdeal.com by David Jones, Sarabeth Sanders and Amy Tennery had the headline "Apthorp lender diverts rents from landlord."
"Following the start of closings at the Apthorp, tenants at the Upper West Side condominium conversion have been told to send rent payments to a new address controlled by Anglo Irish Bank, suggesting there could be more financial trouble looming at the building, according to legal sources and documents obtained by The Real Deal,' the article said, adding that "Attorney Stuart Saft, who represents co-owners Broadwall and Lev Leviev of Africa Israel Investments, said the lender invoked a 'lockbox' provision, under a 2009 deal to extend terms of the building's mortgage loan.
The article then noted that "Ben Thypin, senior market analyst at Real Capital Analytics, said lenders generally invoke lockbox provisions in troubled loan situations." It quoted Mr. Thypin as stating that "They don't want the borrower taking money out of the property that might be needed to service the debt later."
"The rent payment switcheroo," the article continued, "comes weeks after the Apthorp began closing units at prices that surprised tenants and brokers, as they were drastically below those originally listed. For example, apartment 3B, a 2,350-square-foot, two-bedroom unit that was once listed for $6.6 million, finally closed earlier this month for $2.86 million, or 57 percent off its initial asking price, city records show"
The article said that "Tony Smith, president of the Apthorp Tenants Association, said most residents didn't know of the fire sale prices."
"Brokers contacted by The Real Deal said they, too, were taken aback by the closing prices and had not been previously aware that such deals were available. 'Believe me, any of us wish we would've known and gotten in there," one broker said, referring to a 405-square-foot penthouse studio that sold for just $123,717 - 86 percent off its price in the 2008 offering plan - and to a one-bedroom penthouse that sold for $417,177, or an 84 percent discount. Those two penthouse units, both of which had been empty and went to non-tenant purchasers, were 'in totally deplorable condition' and were therefore special exceptions, Saft explained; however, several brokers said that even for a fixer-upper, those prices, in that location, still seem low," the article said.
Maurice Mann of Mann Realty is also an investor in the project.
"The Apthorp was forced to slash prices in 2009 after Mann and Leviev settled a court battle that threatened to drag the property into default," the article said, adding that "in late 2008, Leviev accused Mann of mismanaging the project after mezzanine lender Area Property Partners, formerly Apollo Real Estate, said it would launch foreclosure proceedings against them. As part of the settlement, Leviev brought in the Feil Organization, the parent company of Broadwall, to replace Mann as the managing partner of the conversion. They later brought in Prudential Douglas Elliman's Dolly Lenz as the Apthorp's exclusive broker, amid allegations that Leviev was selling units to business associates to boost sales. Lenz declined to comment. After launching an extensive investigation in 2009, the Attorney General's office, which did not respond to requests for comment, found no proof to back up those allegations. The Apthorp's offering plan was declared effective in May. Roughly 20 units have closed since then, and another 17 are set to follow, Saft said. Rich Marin, chief executive of AFI-USA, the American subsidiary of Africa Israel, described the Apthorp situation as "extremely stable," noting that lenders have given the owners another three years to turn the property around."
"Following the start of closings at the Apthorp, tenants at the Upper West Side condominium conversion have been told to send rent payments to a new address controlled by Anglo Irish Bank, suggesting there could be more financial trouble looming at the building, according to legal sources and documents obtained by The Real Deal,' the article said, adding that "Attorney Stuart Saft, who represents co-owners Broadwall and Lev Leviev of Africa Israel Investments, said the lender invoked a 'lockbox' provision, under a 2009 deal to extend terms of the building's mortgage loan.
The article then noted that "Ben Thypin, senior market analyst at Real Capital Analytics, said lenders generally invoke lockbox provisions in troubled loan situations." It quoted Mr. Thypin as stating that "They don't want the borrower taking money out of the property that might be needed to service the debt later."
"The rent payment switcheroo," the article continued, "comes weeks after the Apthorp began closing units at prices that surprised tenants and brokers, as they were drastically below those originally listed. For example, apartment 3B, a 2,350-square-foot, two-bedroom unit that was once listed for $6.6 million, finally closed earlier this month for $2.86 million, or 57 percent off its initial asking price, city records show"
The article said that "Tony Smith, president of the Apthorp Tenants Association, said most residents didn't know of the fire sale prices."
"Brokers contacted by The Real Deal said they, too, were taken aback by the closing prices and had not been previously aware that such deals were available. 'Believe me, any of us wish we would've known and gotten in there," one broker said, referring to a 405-square-foot penthouse studio that sold for just $123,717 - 86 percent off its price in the 2008 offering plan - and to a one-bedroom penthouse that sold for $417,177, or an 84 percent discount. Those two penthouse units, both of which had been empty and went to non-tenant purchasers, were 'in totally deplorable condition' and were therefore special exceptions, Saft explained; however, several brokers said that even for a fixer-upper, those prices, in that location, still seem low," the article said.
Maurice Mann of Mann Realty is also an investor in the project.
"The Apthorp was forced to slash prices in 2009 after Mann and Leviev settled a court battle that threatened to drag the property into default," the article said, adding that "in late 2008, Leviev accused Mann of mismanaging the project after mezzanine lender Area Property Partners, formerly Apollo Real Estate, said it would launch foreclosure proceedings against them. As part of the settlement, Leviev brought in the Feil Organization, the parent company of Broadwall, to replace Mann as the managing partner of the conversion. They later brought in Prudential Douglas Elliman's Dolly Lenz as the Apthorp's exclusive broker, amid allegations that Leviev was selling units to business associates to boost sales. Lenz declined to comment. After launching an extensive investigation in 2009, the Attorney General's office, which did not respond to requests for comment, found no proof to back up those allegations. The Apthorp's offering plan was declared effective in May. Roughly 20 units have closed since then, and another 17 are set to follow, Saft said. Rich Marin, chief executive of AFI-USA, the American subsidiary of Africa Israel, described the Apthorp situation as "extremely stable," noting that lenders have given the owners another three years to turn the property around."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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