CIM Group is in talks with Esplanade Capital and iStar Financial to buy 47 East 34th Street, the "troubled" mixed-use tower that is currently leased to corporate housing provider Bridgestreet Worldwide, according to an article today by David Jones at therealdeal.com.
"Istar has been shopping the $84 million in debt on the foreclosed property for months and was engaged in talks with an undisclosed buyer in February, but that deal has since collapsed and the lender recently entered discussions with CIM while preparing to place the building on the auction block," the article said.
"CIM, the Los Angeles-based investment firm, led by founder Richard Ressler, has been on something of a buying spree in New York, scooping up the debt at two iStar projects, William Beaver House and Trump Soho. The firm would not divulge any details on these negotiations. 'CIM's policy is not to comment on rumors or speculation in the market,' a spokesperson said. 'Once we have consummated a deal, our policy is to confirm public facts.' Sources would not say how much CIM would pay for the debt, but in 2010 iStar turned down two offers of more than $60 million for the debt," the article said.
The article said that "sources familiar with the discussions say that if CIM agrees to buy the property, it will likely be stuck with BridgeStreet until 2012, but noted that the corporate housing firm is making a profit at the site and would be a solid tenant until the expiration of a court-ordered lease," adding that he assumed CIM "is going to sit on this for a couple of years and condo it out."
"The building," the article continued, "was the subject of a complex and some say questionable financial arrangement involving Esplanade Capital, a Manhattan-based developer led by David Scharf and Jay Eisenstadt. In 2007, Esplanade borrowed $76.1 million from iStar to develop the property and also entered into a $96.7 million bulk sale agreement to sell the property to Sorrento Asset Management, a Dublin-based firm that owns BridgeStreet. Esplanade filed a $150 million suit against iStar alleging the lender conspired with Sorrento to let Bridgestreet continue to operate the extended-stay hotel under a separate deal, but a state Supreme Court judge sided with the lender, arguing that Sorrento stood to lose too much to engage in such a scheme. Esplanade filed an appeal in March to have the...decision overturned, to block the foreclosure by iStar and to have Bridgestreet evicted from the premises. Meanwhile, iStar filed to have a judgment entered against Ireland-based investors Bryan Turley, Darina Heavey, John P.B. Ryan and Ken Healy, who guaranteed the loan at 47 East 34th Street. Scharf and Eisenstadt are already facing a possible judgment as well as Kevin and Donald O'Sullivan, who are principals at Time Square Construction & Development."
The article said that "Esplanade is involved in a separate foreclosure case at the S48, a 43-story hotel and condominium at 306 West 48th Street, where BridgeStreet was scheduled to operate an extended-stay property as well."
iStar filed suit in March 2010 to foreclose on the 36-story tower, which was designed by H. Thomas O'Hara, alleging that Esplanade defaulted on more than $76 million in loans. Esplanade counter-sued alleging that iStar engaged in a scheme with Dublin-based Sorrento Asset Management, the parent company of BridgeStreet, to take over the property and cut Esplanade out of the picture. A state Supreme Court judge ruled in favor of iStar and dismissed claims by Esplanade that the lender attempted a predatory scheme to steal the property from them.
After failing to evict BridgeStreet from the building, the developers leased the building out to Herndon, Va.-based BridgeStreet, which operates a 110-unit extended-stay hotel property at the building. According to court documents filed in December, BridgeStreet received an extension on its existing lease to remain at the property through the end of 2011.
"Istar has been shopping the $84 million in debt on the foreclosed property for months and was engaged in talks with an undisclosed buyer in February, but that deal has since collapsed and the lender recently entered discussions with CIM while preparing to place the building on the auction block," the article said.
"CIM, the Los Angeles-based investment firm, led by founder Richard Ressler, has been on something of a buying spree in New York, scooping up the debt at two iStar projects, William Beaver House and Trump Soho. The firm would not divulge any details on these negotiations. 'CIM's policy is not to comment on rumors or speculation in the market,' a spokesperson said. 'Once we have consummated a deal, our policy is to confirm public facts.' Sources would not say how much CIM would pay for the debt, but in 2010 iStar turned down two offers of more than $60 million for the debt," the article said.
The article said that "sources familiar with the discussions say that if CIM agrees to buy the property, it will likely be stuck with BridgeStreet until 2012, but noted that the corporate housing firm is making a profit at the site and would be a solid tenant until the expiration of a court-ordered lease," adding that he assumed CIM "is going to sit on this for a couple of years and condo it out."
"The building," the article continued, "was the subject of a complex and some say questionable financial arrangement involving Esplanade Capital, a Manhattan-based developer led by David Scharf and Jay Eisenstadt. In 2007, Esplanade borrowed $76.1 million from iStar to develop the property and also entered into a $96.7 million bulk sale agreement to sell the property to Sorrento Asset Management, a Dublin-based firm that owns BridgeStreet. Esplanade filed a $150 million suit against iStar alleging the lender conspired with Sorrento to let Bridgestreet continue to operate the extended-stay hotel under a separate deal, but a state Supreme Court judge sided with the lender, arguing that Sorrento stood to lose too much to engage in such a scheme. Esplanade filed an appeal in March to have the...decision overturned, to block the foreclosure by iStar and to have Bridgestreet evicted from the premises. Meanwhile, iStar filed to have a judgment entered against Ireland-based investors Bryan Turley, Darina Heavey, John P.B. Ryan and Ken Healy, who guaranteed the loan at 47 East 34th Street. Scharf and Eisenstadt are already facing a possible judgment as well as Kevin and Donald O'Sullivan, who are principals at Time Square Construction & Development."
The article said that "Esplanade is involved in a separate foreclosure case at the S48, a 43-story hotel and condominium at 306 West 48th Street, where BridgeStreet was scheduled to operate an extended-stay property as well."
iStar filed suit in March 2010 to foreclose on the 36-story tower, which was designed by H. Thomas O'Hara, alleging that Esplanade defaulted on more than $76 million in loans. Esplanade counter-sued alleging that iStar engaged in a scheme with Dublin-based Sorrento Asset Management, the parent company of BridgeStreet, to take over the property and cut Esplanade out of the picture. A state Supreme Court judge ruled in favor of iStar and dismissed claims by Esplanade that the lender attempted a predatory scheme to steal the property from them.
After failing to evict BridgeStreet from the building, the developers leased the building out to Herndon, Va.-based BridgeStreet, which operates a 110-unit extended-stay hotel property at the building. According to court documents filed in December, BridgeStreet received an extension on its existing lease to remain at the property through the end of 2011.
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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