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A blog from CityRealty (Links below will take you to the 6sqft site)

Carter's View

"Anglo Irish Bank Corp., the troubled bank at the heart of Ireland's controversial bailout, is raising cash by dumping New York real estate assets," according to an article by Craig Karmin today in The Wall Street Journal, and "its latest move: putting up for sale a $147 million construction loan that financed the Setai Wall Street condominium and spa at 40 Broad Street in the financial district."

The former office building, "developed by Zamir Equities, was one of the most ambitious efforts by New York developers to transform the sleepy financial district into a thriving residential area. Units have sold for as much as $7.8 million, a record amount in the area, the developers say," the article reported.

Ireland on Sunday reached an agreement with European governments and the International Monetary Fund for an ?85 billion ($113 billion) bailout. The funds will help recapitalize Irish banks that have been hit by bad loans.

The bank was nationalized last year after suffering huge losses from commercial property loans abroad that soured when global markets collapsed and the article noted that it "already is trying to figure out a strategy for the $270 million in debt it holds on the Mark, a hotel and co-op conversion project on the Upper East Side."

"The developer of that project, Alexico Group," it continued, "has spiffed up the hotel with a full renovation, including a new marble lobby and a trendy Jean-Georges Vongerichten restaurant. It's also been struggling to convert some of the hotel's 160 units into luxury co-ops. Alexico is in discussions with Anglo Irish about buying back its own debt from the bank, according to people familiar with the matter."

The Setai Wall Street got off to a fast start with about three-quarters of 162 units in contract, brokers say, but many buyers got out of their contracts last year after the project ran aground with construction delays and cost overruns, the article said, adding that "construction was completed earlier this year, and the developers kept marketing the project. Asher Zamir, a principal at Zamir Equities, says that buyers have closed on nearly 40% of the condos and another 10% are in contract. The New York attorney general has halted any additional closings until the lending group, led by Anglo Irish, provides more information about the project's financing, according to Mr. Zamir."

"Brokers say there are a number of firms expected to make offers on the Setai Wall Street debt by Tuesday, the bidding deadline. The sale is being run by Holliday Fenoglio Fowler," the article said.

The Setai Group, a hotel and development company that provided branding and design for the project, filed a lawsuit in State Supreme Court in September alleging that some of the building's features were below Setai standards. After several condo purchasers sued to get out of their contracts, the developers in the summer of 2009 offered buyers the right to rescind their contracts and get their deposits back. Most buyers took them up on the offer, brokers say.

The developers defaulted on the Anglo Irish debt in 2009, according to the Setai complaint.

The Setai New York includes 166 residential units that start at the 8th floor, and 12 commercial units. The building opened as a 25-story office building in 1982 and Gruzen & Partners were the original architects.

A 24-foot-deep slice of the building was removed from the 8th floor and above to comply with the city's "rear yard" requirements. The removed floor area and floor area available from complying with the city's "Quality Housing" regulations were reconfigured at the top of the building, which is 30-stories in height.

Avinash K. Malhotra was the architect for the conversion.

40 Broad LLC, which is affiliated with Zamir Equities, acquired the building for about $64 million from Tishman Speyer Properties.

Anglo-Irish had also financed projects like Yair Levy's 225 Rector Place and the Apthorp.
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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.