Last Friday, Lev Leviev, the head of Africa Israel Investments Ltd., filed an emergency injuction, according to an article by Christina S. M. Lewis in today's edition of The Wall Street Journal, to "wrest control" of the condominium conversion of the Apthorp apartment house on Broadway between 71st and 72nd Street from its managing partner and 50 percent owner, Maurice Mann, owner of Mann Realty.
The article maintained that the conversion "is in danger of defaulting, and only one unit has sold in the six months since the $1 billion project was announced, according to court documents and interviews with people familiar with the project." The court douments filed by Mr. Leviev's company charge that Mr. Mann has "run amok as manager" and spent "operations money on his personal legal fees" and allowed "employees in live in the Apthorp's vacant apartments."
The article said that Theodore Steingut, Mr. Mann's attorney, said he had not seen the injunction papers but maintained that "sniping" from Africa Israel "had made the project's management more difficult, and that many of Africa Israel's claims are in error."
In March 2007, Mr. Leviev and Mann Realty bought the Apthorp, which was erected in 1908 and has 163 apartments, in March, 2007 for $426 million. The Apthorp, which has a large courtyard and an impressive, gated entrance on Broadway, was designed by Clinton & Russell and occupies the full block between Broadway and Amsterdam Avenue and 78th & 79th Streets and is considered one of the finest residential buildings on the Upper West Side.
According to the article, the conversion proceeded with Mr. Mann as the managing partner and "Anglo Irish Bank Corp. provided a $385 million loan and Apollo Real Estate Advisors LP gave a $135 million mezzanine loan to purchase, renovate and market the development."
"Last summer, the developers began offering condos at nearly $3,000 a square foot, placing the building's sell-out value at approximately $1 billion. But as the real-estate market plummeted, Apollo began objecting to the project's budget, saying its business plan no longer made sense because of falling prices and cost overruns. In August, Apollo made a capital call of $12 million to bring its loan back in balance. It was paid. In the first week of December, Apollo made another $22.7 million capital call. Apthorp's management, controlled by Mr. Mann, responded with a $500 million lawsuit, claiming the repayment request was an improper "ransom" payment and accusing Apollo of trying to take over the Apthorp at a bargain price. Mr. Mann quickly dropped the suit, but it infuriated Mr. Leviev, who moved to oust Mann Realty as manager," the article continued.
The article also noted that the former headquarters building of The New York Times at 229 West 43rd Street, which had been acquired last year by Mr. Leviev, an Israeli diamond merchant, remains "largely unleased even though the building's renovation is complete."
"Africa Israel shares have fallen more than 80% in the past year," the article said, "and plummeted 20% in the past month alone, to $4.25 Tuesday on the Tel Aviv Stock Exchange. In the fall, Africa Israel announced a $475 million third-quarter loss because of falling real-estate values, mainly in Russia, and sold several of its New York assets to pay down debt. These included half its stake in the Times building, which an unnamed investor is buying for $50 million plus an assumption of half the building's $720 million debt. Mr. Leviev paid $525 million for the 780,000-square-foot landmarked building in 2007, triple what the New York Times Co. had sold it for just three years earlier. The 16-story building recently completed a $200 million renovation, according to a person briefed on the project. All floors are listed as available on its Web site, and some Midtown Manhattan office-leasing brokers said they hadn't heard of any deals. The Times building's leasing agents at CB Richard Ellis declined to comment."
The article maintained that the conversion "is in danger of defaulting, and only one unit has sold in the six months since the $1 billion project was announced, according to court documents and interviews with people familiar with the project." The court douments filed by Mr. Leviev's company charge that Mr. Mann has "run amok as manager" and spent "operations money on his personal legal fees" and allowed "employees in live in the Apthorp's vacant apartments."
The article said that Theodore Steingut, Mr. Mann's attorney, said he had not seen the injunction papers but maintained that "sniping" from Africa Israel "had made the project's management more difficult, and that many of Africa Israel's claims are in error."
In March 2007, Mr. Leviev and Mann Realty bought the Apthorp, which was erected in 1908 and has 163 apartments, in March, 2007 for $426 million. The Apthorp, which has a large courtyard and an impressive, gated entrance on Broadway, was designed by Clinton & Russell and occupies the full block between Broadway and Amsterdam Avenue and 78th & 79th Streets and is considered one of the finest residential buildings on the Upper West Side.
According to the article, the conversion proceeded with Mr. Mann as the managing partner and "Anglo Irish Bank Corp. provided a $385 million loan and Apollo Real Estate Advisors LP gave a $135 million mezzanine loan to purchase, renovate and market the development."
"Last summer, the developers began offering condos at nearly $3,000 a square foot, placing the building's sell-out value at approximately $1 billion. But as the real-estate market plummeted, Apollo began objecting to the project's budget, saying its business plan no longer made sense because of falling prices and cost overruns. In August, Apollo made a capital call of $12 million to bring its loan back in balance. It was paid. In the first week of December, Apollo made another $22.7 million capital call. Apthorp's management, controlled by Mr. Mann, responded with a $500 million lawsuit, claiming the repayment request was an improper "ransom" payment and accusing Apollo of trying to take over the Apthorp at a bargain price. Mr. Mann quickly dropped the suit, but it infuriated Mr. Leviev, who moved to oust Mann Realty as manager," the article continued.
The article also noted that the former headquarters building of The New York Times at 229 West 43rd Street, which had been acquired last year by Mr. Leviev, an Israeli diamond merchant, remains "largely unleased even though the building's renovation is complete."
"Africa Israel shares have fallen more than 80% in the past year," the article said, "and plummeted 20% in the past month alone, to $4.25 Tuesday on the Tel Aviv Stock Exchange. In the fall, Africa Israel announced a $475 million third-quarter loss because of falling real-estate values, mainly in Russia, and sold several of its New York assets to pay down debt. These included half its stake in the Times building, which an unnamed investor is buying for $50 million plus an assumption of half the building's $720 million debt. Mr. Leviev paid $525 million for the 780,000-square-foot landmarked building in 2007, triple what the New York Times Co. had sold it for just three years earlier. The 16-story building recently completed a $200 million renovation, according to a person briefed on the project. All floors are listed as available on its Web site, and some Midtown Manhattan office-leasing brokers said they hadn't heard of any deals. The Times building's leasing agents at CB Richard Ellis declined to comment."
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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