Investment Sales

The New York-based real estate private equity firm Brickman has dropped $96.5 million on 95 Morton Street, an eight-story pile of bricks at the corner of Morton and Washington streets. The Fifth Avenue firm signed the deed on Nov. 21.

The Hudson Square building dates back to 1911, has 203,412 square feet and is home to tech clients like SAP and SpiralFrog.  read more »

Camper, the Majorca-based shoe retailer, has purchased an appropriately stylish little one-story building at the corner of Prince and Greene streets for $16 million.

Camper closed the deal on Nov. 13, according to city records, buying the building from Charles Rosenblum.

Heather Ryan, Camper's U.S. retail manager, told The Observer that for the time being, Camper intends on acting merely as a landlord. Right now, the one-story building is home to two tenants -- including Face -- both of which have long-term leases.  read more »

From GlobeSt: "Paramount Group, Inc. and a corporate pension trust advised by JP Morgan Asset Management have entered a joint venture to recapitalize 31 W. 52nd St. Paramount acquired the 776,849-square-foot 31 W. 52nd St. last December for $595 million."

Brooklyn and Queens in the third quarter of 2008 recorded their lowest number of apartment building sales in two years, according to new data from PropertyShark. Brooklyn notched 1,189 closed building deals in the three months ending Sept. 30, and Queens notched 1,107. (The PropertyShark data defined apartment buildings as those buildings with at least two residential units.)

Not surprisingly, too, the total dollar volumes of apartment building sales were the lowest they've been in two years in both boroughs: $929 million worth of deals for Brooklyn in the third quarter, and $730 million for Queens.  read more »

The General Motors Building is just the beginning, according to the real estate head of the Qatar Investment Authority, who told Bloomberg News that the sovereign fund plans to buy up many more distressed real estate assets in the coming years.

"We are looking for prime properties in major cities at distressed prices,'' Navid Chamdia, the authority's real estate head, told Bloomberg. "We will continue to invest in attractive assets we are comfortable with.''

The Qatari fund was a big backer of Boston Properties' purchase of New York's most promiment trophy building earlier this year for a record-setting sum of $2.8 billion. The fund also joined Boston Properties in its purchase of three other Manhattan assets once belonging to Harry Macklowe.  read more »

Stuart Rothenberg, who has headed Goldman Sachs' real estate investment division since 2003, announced on Thursday that he's retiring at age 45, the Wall Street Journal reports. Mr. Rothenberg will remain at Goldman as a consultant for its well-known Whitehall family of funds.

From The Real Deal: "Hotel developer Sam Chang of the McSam Hotel Group and a partner sold their newly opened Wyndham Garden Hotel Manhattan Chelsea West, for $39.06 million, according to property records published today. The 17-story hotel with 124 rooms opened last week at 37 West 24th Street, a hotel employee said."

For more Observer coverage on the prolific Mr. Chang, including another Chelsea hotel trade, click here.

From Crain's: "The sale of Starrett City has been delayed because the owner of the sprawling Brooklyn complex and federal housing officials have been unable to agree on the fair market value of future rents. Starrett City Associates had initially expected to select a winning bid by early September, but the owner feels rents set by the Department of Housing and Urban Renewal are too low, preventing it from gaining fair value for the property."

The building once home to Mo Pitkin's House of Satisfaction has been sold for $4 million, according to city records.

The restaurant/bar/performance space known as Mo Pitkin's, which closed last year, was part of East Village entrepreneur Phil Hartman's now apparently disintegarting empire. Earlier this month, Mr. Hartman announced that he was closing his Two Boots Pioneer Theater nearby.

The squat edifice, at 34 Avenue A, was sold to an entity called LAMNG Corporation. The building has been on the market for more than a year, with an initial listing price of $5.5 million.

As recently as July, Mr. Hartman told Observer reporter Chris Shott that times were tough, but that his entertainment empire would survive: "It's not easy for anyone doing business in NYC these days.  read more »

From The Real Deal: "The Rockefeller Group Development Corporation paid $62.5 million for a six-story garage at 148 West 48th Street, dramatically increasing its holdings on a stretch east of Seventh Avenue near Times Square. The approximately 48,700-square-foot garage, on a 75-foot by 100-foot lot, is next to a building that Rockefeller Group controls through a 99-year lease executed in April. The garage site has a development potential of 90,373 square feet, according to PropertyShark. ... Robert Knakal, chairman of brokerage Massey Knakal Realty Services, who was not involved with the sale, said the price appeared to be too steep for just a garage."

Residential brokerage powerhouse Halstead Property announced today it has launched an investment sales division to broker commercial real estate deals. The division will be headed by John D. Goldman as managing director and will be headquartered at 770 Lexington Avenue.

Mr. Goldman comes from Murray Hill Properties, where, according to a Halstead release, he sold over $100 million in Manhattan buildings and development sites.

It's not the most auspicious time to be delving into investment sales: 2008, because of the Wall Street collapse and the tighter credit markets, is shaping up to be a comparatively paltry year for Manhattan investment sales. Still, opportunities abound, especially in the mid-range market.  read more »

It's going to be a dismal year for Manhattan investment sales. That much is already clear: In the first nine months of 2007, $42.4 billion in buildings and building portfolios traded; in the first nine months of this year, $18.7 billion did. That's according to Cushman & Wakefield numbers for deals of at least $10 million.

Above, the C&W Capital Markets Group breaks down the trades in '08 as of Sept. 30.

Note the dominance of Class A office space--55 percent of investment deals this year. That percentage should dwindle in 2009, as the credit markets and foreign investment that fuel the bigger Manhattan trades continue to dry up. Smaller trades could be The New Big!

It's back to the future in commercial real estate!

Howard Michaels, chairman of The Carlton Group, is bringing the live auction back to the industry.

Mr. Michaels will now hold what are known as "oral outcry" auctions for commercial real estate assets--bricks-and-mortar properties and loans--through a new entity called Carlton Auctions LLC.

This is not Mr. Michaels first foray into the live auction format. Back in the 1990s, in the days of the RTC, spawned by the savings and loan crisis, Mr. Michaels auctioned off thousands of real estate assets using live auctions.

Experienced auctioneers Oren Klein and Josh Olshin will lead the auctions.  read more »

Sam Chang has sold Hampton Inn Empire State Building, at 57 West 35th Street, for $46 million, according to city records.

Mr. Chang purchased the development site in 2006 for $13.3 million.

The Hampton Inn, well situated between Fifth and Sixth avenues, near Herald Square, is just the latest McSam hotel to fall into the hands of the Rhode Island-based Magna Hospitality Group.

Earlier this fall, Mr. Chang sold Magna his new Holiday Inn Manhattan Hotel in Chelsea for $66 million. And earlier this year, he sold the firm 8 Stone Street in the Financial District, 60 West 36th Street and 231 East 43rd Street.  read more »

Here's the five biggest Manhattan rental apartment building sales by price so far in 2008, according to the new Marcus & Millichap report. (More on the report's other findings here.)

1. 257 Clinton Street for $174 million or $277 a square foot.
2. 1445-1451 Third Avenue for $150.35 million or $732 a square foot.
3. 201-203 East 86th Street for $42.5 million or $165 a square foot.
4. 370-374 Columbus Avenue for $21 million or $675 a square foot.
5. 228-238 East 44th Street for $16.2 million or $120 a square foot.

An ugly little Herald Square office building has traded for $10.5 million, according to city records.

The four-story building in question squats at 49 West 33rd Street, between Fifth Avenue and Broadway. An obscurely named entity called KC129-09 LLC bought the building from another obscurely named entity, 4933 Realty LLC, on Oct. 3. The latter turned a tidy, $3.5 million gross profit, despite the economic downturn, having purchased the building in June 2007 for $7 million.

In case you're not yet numbed to bad economic news, here's some more.

RCA Analytics has released its latest global trends report, and it concludes that global investment sales are--suprise, surprise!--tanking:

"Sales of significant commercial properties worldwide totaled $388b (€254b) through August, representing a 57% decrease compared to same period in 2007."

Nice! Even better, "The pace of transactions continues to slow and preliminary data for Q3’08 shows an even steeper decline of 64% from Q3’07."

Here are some of the report's other conclusions:

First, we should expect a lot more properties to come on the market, either through distressed sales, or companies looking to shore up their balance sheets:

"The failure of Lehman Brothers and the government bailout of AIG may bring a multi-billion dollar flood of new offerings to the market.

 read more »

A firm called Endland LLC has purchased two 26-story apartment buildings at 251 Cherry Street on the Lower East Side for $170.8 million, according to city records.

Endland LLC, an entity affiliated with Pembroke Companies, bought the buildings from Helen Drew on Sept. 24.

On its Web site, Pembroke describes itself as "a privately held real estate investment, development and management firm. Pembroke makes significant, usually lead investments in both public and private real estate companies, whose portfolios include multifamily residential properties, net lease retail and shopping centers, industrial properties and other mixed-use properties."

Calls to Pembroke's founder were not immediately returned.

Pembroke got some press earlier this year when it sought to purchase the 200-unit, Mitchell Lama Trinity House, on the Upper West Side.

Mid-market brokerage Massey Knakal has cut its team of brokers from 63 to 46, according to The Real Deal:

"The latest round of cuts was last month. Compared to the start of the year, the number of agents in Brooklyn and Staten Island has dropped to 14 from 21; and Queens and Nassau has declined from 15 to eight, Massey said. Manhattan, the Bronx and Westchester has fallen by three to 24 brokers."

Paul Massey, CEO and co-founder of the brokerage, told the real estate monthly that the cutbacks had nothing whatsoever to do with the dramatically tanking economy--and the dramatic dip in the volume of investment sales.

"Everyone will think this is in reaction to economic externalities, but the planning for the growth in territory size has been going on all year," he told The Real Deal.

We are incredulous.  read more »

It is holy writ at this point that foreign money props up Manhattan's investment sales market. With $7.4 billion spent, foreign investors accounted for over 40 percent of all Manhattan building and property portfolio sales in the first nine months of 2008, according to numbers out today from Cushman & Wakefield covering deals of at least $10 million. That's a jump from the $5 billion during the same time in 2007.

But foreign economies, particularly in Europe, are starting to crumble. Iceland's just about bankrupt. Germany and Belgium have had to do their own bank bailouts. Spain's housing bubble burst this year. And has anybody else noticed that $1 now equals 1.  read more »

Israeli banks are growing increasingly fearful that Lev Leviev's Africa-Israel--owner of the old New York Times building and other New York City trophies--will be unable to repay the more the $4 billion (or 14 billion shekels) he's taken in short- and long-term loans, according to an article in today's Haaretz:

"Lev Leviev's Africa Israel Investments owes Israel's banks more than NIS 14 billion in long-term and short-term liabilities, and the bankers are evidently growing nervous about the huge amount. Within days the two biggest lenders, Hapoalim and Leumi, are expected to receive rights to yet more shares in the Africa Israel parent company to secure the debts."

 read more »

On Sept. 15, while the rest of the world was preoccupied with the demise of Lehman Brothers, Bank of America's acquisition of Merrill Lynch, and AIG's request for a government loan, at least two parties in this city went about business as usual.

A buyer affiliated with Anbau Enterprises bought the diminutive, five-story 124 West 23rd Street from Franpearl Equities Corp. for $19.3 million. The building last traded in 2004 for $10.6 million.

According to Anbau's Web site, "The plan is to construct a new 16-story building containing approximately 34 luxury residences, each with high-quality finishes and attractive city views. Anbau is set to deliver unique, flexible spaces tailored to this vibrant community.  read more »

Today's the deadline to bid on Brooklyn's Starrett City, the nation's largest federally subsidized housing complex. And, unless a dark horse bolts from the shadows, it looks like there will be only two bidders, both of which have community ties that could assuage the affordability concerns of the Department of Housing and Urban Development.

The two groups, according to media reports, are a partnership of Westbrook Partners, the Metropolitan Council on Jewish Property and the New York City Labor Council, among others; and a partnership of the Clarrett Group, the Christian Cultural Center, Housing Partnership Development Corp. and the Cogsville Group.

HUD is expected to decide on a buyer for the more than 6,000-unit complex in the next few weeks.  read more »

Massey Knakal chairman Bob Knakal prefaces his latest commentary thusly:

Now I know that some of you will jump down my throat and accuse me of wearing my rose colored glasses and laying some broker BS on you just based on the title of this installment. So let me first acknowledge that, looking at the financial sector as a whole, we are in troubled times and in unchartered territory. Our entire “free market” philosophy is being challenged, 158 year old fi nancial giants are going bankrupt and the Government has seized the country’s largest insurance company. Inflation is high, credit is tight, mortgage delinquencies are rising, foreclosures are rapidly increasing, consumer spending is slowing, consumer confi dence is in the toilet and people are liquidating money market accounts based upon fear and these accounts have always generally been considered as good as cash.

 read more »

In the halcyon days before the financial world began crumbling around us, two innocent little buildings on the Upper West Side traded for $111.5 million, according to city records.

On Sept. 11, Downtown Realty Associates sold a six-story building, at 210 West 76th Street, for $36.5 million to an entity calling itself 76th and Broadway Owner LLC. The deed was uploaded to the city's Web site today.

Interestingly, the building falls near 2148 Broadway, which Rebak Realty sold on Sept. 11 to 76th and Broadway Owner LLC, in this case for $75 million. According to a recent New York Post article, Continental Ventures plans to build a 24-story luxury development there.

A call to the developer about whether 210 West 76th Street would be used in that 2148 Broadway development was not immediately returned.

The weekend Wall Street crisis will affect New York real estate. Here's how:

Apartment sales ~ Manhattan recorded over 10,000 home sales in 2007, but sales numbers have been off throughout the city in 2008. In Manhattan in the second quarter, home sales were down 21.8 percent annually, according to a Miller Samuel-Douglas Elliman report. In Queens, 23.7 percent; and, in Brooklyn, over 43 percent. The Wall Street crisis, due to the inordinate influence of the Street on local apartment and townhouse sales, will likely drive the number of deals further downward as the year ends. This could give a hefty advantage to buyers.  read more »

Take that, Sam Chang!

A budget Madison Avenue hotel (dubbed, appropriately enough, Madison Hotel), has traded for a cool $32 million, according to city records uploaded today.

The hotel, at 62 Madison Avenue, rents out single rooms, with bath and shower and AC, for just $138 dollars a night, doubles for $150.65, and "family rooms" for $163.30.

The buyer, an entity called Madison Hotel LLC, closed on the 11-story building on Aug. 28.

From the new Real Deal:

For years there was a buzz about the potential of a residential boom in the South Bronx, but with the credit crunch making it nearly impossible for small-scale investors to obtain financing in the area, any sort of explosion appears to be on hold. ...

Much of SoBro's residential housing is made up of row houses originally constructed as low-income housing.

 read more »

"Serves them right for tearing down such a wonderful hotel to build another ugly residential property." ["Deutsche Sues to Foreclose on Macklowe's Drake Hotel Site"]

Hot damn! The Real Deal is reporting that Deutsche Bank is suing Macklowe Properties "to foreclose on $482 million in principal loaned to develop the Drake Hotel site at Park Avenue and 56th Street, according to a complaint filed [on Aug. 28] in New York State Supreme Court."

According to the report:

"The suit seeks to regain control not only of the 24,000-square-foot development site at the corner of Park Avenue and 56th Street, but also six properties that were drawn into the development loan."

Macklowe Properties has reportedly been planning to erect a 70-story residential tower at the site. But talk of the Macklowe plans have been overshadowed by the firm's well-publicized wrangling with Deutsche Bank over other problematic loans.  read more »

A Japanese investment firm called Mitsui Fudosan is under contract to buy 527 Madison Avenue for $160 million, according to a source familiar with the deal, shattering rumors that a Chicago-based firm was the main contendor for the building.

Mitsui Fudosan is buying the 26-story 527 Madison for $225 million. Meanwhile, the Chicago-based Transwestern is under contract to take Tower 56 at 126 East 56th Street at for $160 million.

Both buildings were part of the so-called Equity Office Portfolio, which Macklowe Properties bought in early 2007 for a stunning $7 billion, putting down just $50 million and leveraging the GM Building.  read more »

Sheesan Hotel LLC, an affiliate of economy hotel tycoon Sam Chang, has sold the new Holiday Inn Manhattan Hotel in Chelsea for $66 million to a Rhode Island-based hospitality group, according to records uploaded on Friday to a city Web site.

The buyer, MMG-26 LLC, affiliated with Magna Hospitality Group, closed on the 23-story, 226-room hotel, at 121 West 26th Street, on June 30.

This isn't the first time Mr. Chang has sold property to Magna. This year alone, he sold the Rhode Island firm 8 Stone Street in the Financial District, 60 West 36th Street and 231 East 43rd Street.  read more »

The Boston Globe has new details about Broadway Partners' financing troubles stemming from its $1.3 billion shopping spree in 2006, homing in on its highly leveraged purchase of Boston's John Hancock Tower and a related parking lot, which were part of a Beacon Capital Partners portfolio.

According to The Globe:

"Broadway bid aggressively to buy the Hancock Tower near the height of the market and borrowed heavily to make it work. A long-term first mortgage for $640 million is piled on top of short-term mezzanine financing of $472 million, according to a real estate executive with access to the numbers. All in, call that $1.

 read more »

Channeling Gordon Gekko in Wall Street, Massey Knakal chairman Robert Knakal in his weekly commentary ran down the benefits of a voracious Street when it comes to real estate investment. Taking us back, Mr. Knakal lays out how the stock crises of the past two decades (the dot-com bust, Enron, WorldCom, subprime-backed securities) have spurred a healthier appetite for investment in the bricks-and-mortar tangibility of real estate.

Investors, now more than ever, want to understand what they are investing in. Real estate is so transparent. It is so easy to understand. The income is what the income is, as are the condition of the property and the operating expenses.

Natural gas and heating oil costs are expected to rise considerably as the nation slides into winter, according to a Wednesday New York Times story. (Rising heating oil prices “could be New England’s own Katrina,” wrote one Vermont newspaper recently.) In New York City, these increases could affect building sales as traders must deduce future heating costs not based on today's numbers--or last year's--but on the anticipation that such costs are going to keep going way up. These deductions affect the pricing of buildings on the sales block.

Here was Robert Knakal, chairman of investment-sales firm Massey Knakal, last month in a company release:

Right now we are seeing, for the first time since drilling began in the 1850’s, prices climbing for 7 consecutive years.

 read more »

A 91-unit apartment building at the corner of West End Avenue and 101st Street has traded for $83 million, an uplifting note in an otherwise dreary market.

An entity called Sterling American Property Fund IV bought the building, 845 West End Avenue, from Nostra Realty Corp on July 24, according to a deed that entered city records yesterday.

The purchaser had to put down $23 million for the purchase (27.8 percent) and got $60 million in financing from Valley National Bank, according to CoStar.

The 13,398-square-foot building was built in 1930. Two-bedroom apartments in the building rent for between $6,250 and $8,500 a month, according to streeteasy.com.

Correction: The building's square footage is 200,981.

Marquee New York properties notwithstanding, foreign investors are fast losing interest in an American commercial real estate market increasingly buffeted by the credit crisis.

According to an Associated Press report published in today's International Herald Tribune:

"Middle East investment is expected to be flat or down this year compared to a banner year in 2007. More than half way through the year, Mideast investors have shelled out $2.7 billion for U.S. assets, according to Real Estate Analytics Inc., a New York-based real-estate research firm. But at that pace, this year's total sales will likely fall far below last year's $8.2 billion in deals.  read more »

• 0 comments

It's a divorce that may soon dwarf the Brinkley-Cook debacle in ugliness.

The banking industry, pressured by regulators to reduce its exposure to the collapsing real estate market, has been squirming out of its loan obligations to developers, killing projects midstream, according to developers quoted in an article in today's Wall Street Journal:

"As lenders rush to curtail their real-estate exposure and preserve sorely needed capital, they are triggering lawsuits from builders that say the banks have unfairly cut off their construction financing, stopped their projects midstream and forced their companies to the brink of bankruptcy.

'Lender-liability lawsuits are coming. It's only just beginning,' says Michael Hackard, a lawyer in Sacramento, Calif.  read more »

• 0 comments

Soon, we'll be as blase about the bad economic news as we were -- oh so recently -- about the good news.

But not yet. On today's downbeat wire, Reuters reports that, "Commercial real estate prices fell 3.5 percent in May, the biggest drop since at least December 2000, as a slowing economy took a toll on property values, Moody's Investors Service said on Monday."

"Commercial real estate prices, as measured by Moody's/REAL Commercial Property Price Index, are down 5.7 percent from a year earlier and 8.8 percent from their peak in October 2007, Moody's said in a report.

May's decline marked three straight months of negative returns for the index, Moody's said in a report."

For more on this dispiriting development, click here.

At least Australians can afford property in New York City!

The comparative weakness of the dollar and the tanking American economy, coupled with New York City's international cache, have made New York top dog among American cities in its ability to soak up the international real estate dollars, according to Forbes.

The other cities in the top 10 -- which is based on an annual Association of Foreign Investors in Real Estate Survey -- include: 10-Orlando; 9-Phoenix; 8-Las Vegas; 7-Chicago; 6-Boston; 5-Seattle; 4-San Francisco; 3-Los Angeles; and 2-Washington, D.C.

According to the article:  read more »

New York holds the top spot, but not because of the much celebrated pied-à-terre buyers in Manhattan using the weak dollar to buy into pricey neighborhoods, a trend that has flattened out, says Jonathan Miller, president of Miller Samuel, a New York appraisal firm.

• 0 comments

On June 25, as tennis lovers raptly followed the progress of Rafael Nadal and Roger Federer, Serena Williams and her sister Venus on the grass courts in England, a separate Wimbledon drama was happening stateside.

That day, JP Morgan Investment Management closed on the purchase of The Wimbledon from P&H Associates. The building, a 28-story, 230-unit apartment complex at 200 East 82nd Street on the Upper East Side, sold for $150 million.

“The credit crunch has taken its toll on the multifamily market in Manhattan over the last year, with very few transactions completed, but the sale of The Wimbledon ─ at such a strong pricing level ─ verifies there is still a market for prominent buildings with strong fundamentals,” said Jubeen Vaghefi, a managing director at Jones Lang LaSalle, in a statement.  read more »

Haim Revah and partners "emerged unscathed in their refinancing of the iconic Lipstick Building, a New York office tower it bought near the top of the market in 2007 for $607 million," the Wall Street Journal reports this morning.

Mr. Revah's Metropolitan Real Estate Investors and partners had a $60 million loan from Goldman Sachs due July 10, tomorrow. The partners were able to refinance, however, and reduce the principal owed the banking giant.

The Lipstick Building, at 885 Third Avenue, is nearly full, the Journal notes, though a small space remains available on the 33rd floor.

Ronald Winston, son of the founder of the eponymous Harry Winston jewelers, has sold the firm's flagship building at 718 Fifth Avenue for $62 million, according to city records.

Paramount Group, which made the purchase, is apparently on a shopping spree that would make even Harry proud. Albert Behler's Paramount is apparently snapping up 1301 Avenue of the Americas, the Credit Lyonnais Building, for a staggering $1.5 billion.

Neither Paramount Group's spokeswoman nor the spokesperson for Harry Winston could be reached for comment.