Solow pays $128M for Billionaires’ Row site he once fought with Barnett over

Developer could build tower with 213K sf in residential space on assemblage

May 25, 2016 04:50PM
By Konrad Putzier

16 West 57th Street in Midtown (inset: Sheldon Solow)

16 West 57th Street in Midtown (inset: Sheldon Solow)

Back in 2011, Sheldon Solow lost a bidding war over 16 West 57th Street to Gary Barnett’s Extell Development, blocking his plans to build a luxury tower on the site and three adjacent parcels. Five years and one lawsuit later, Solow finally has his prized property.

The famously litigious developer bought the five-story, 24,000-square-foot office and retail building from Brazilian real estate firm JHSF for $128 million, according to property records filed with the city Wednesday.

Solow’s namesake company already owned the two parcels to the building’s left and right – 10 and 20 West 57th Street – and a site to its immediate south, 19 West 56th Street. He now controls an assemblage with enough air rights to build a tower with 213,000 square feet of residential space, according to Reonomy. Solow also owns the 1.38 million-square-foot office building 9 West 57th Street across the street.

Extell bought 16 West 57th Street for $80 million in 2011, a move some saw as designed to block Solow from building a luxury condo tower that could rival Extell’s One57. In a 2013 lawsuit, Extell accused Solow of obstructing its plans to build a tower on the lot by denying its workers entry to neighboring 10 and 20 West 57th Street and 19 West 56th Street.

Extell sold the building to Brazilian development firm JHSF in September 2014 for $95 million. JHSF announced plans to build a Raphael-Vinoly designed luxury hotelon the site, but the plans apparently never got off the ground. Instead the firm got tangled up in a lawsuit from brokerage Endeavour Global Group Realty, which in June 2015 claimed it was owed $5.7 million in commission fees over the buy.

Solow could not be reached for comment.


Jared Kushner funding JDS and Chetrit’s Brooklyn supertall

Kushner Cos. and Moinian Group launched lending platforms this year

May 17, 2016 05:04PM
By Konrad Putzier


340 Flatbush Avenue Extension in Brooklyn (inset: Michael Stern and Jared Kushner)

340 Flatbush Avenue Extension in Brooklyn (inset: Michael Stern and Jared Kushner)

Kushner Companies is a mezzanine lender on JDS Development Group’s and Chetrit Group’s supertall mixed-use development in Downtown Brooklyn, The Real Deal has learned.

JDSTRData LogoTINY and the Chetrit Group bought the landmarked Dime Savings Bank at 9 DeKalb Avenue last year, and in January, filed plans for a 1,066-foot-tall tower on the adjacent lot 340 Flatbush Avenue Extension. The 73-story mixed-use tower, slated to hold more than 400 apartments, would be the borough’s tallest building by a margin.

Kushner Cos.’ involvement was not previously disclosed, and the size of the loan the Jared Kushner-led firm is providing isn’t immediately clear. JDS and Chetrit also landed a $115 million senior loan from a subsidiary of Fortress Investment Group to finance the acquisition of 340 Flatbush and refinance 9 DeKalb. The partners are yet to secure a construction loan.

Kushner Cos.’ role as a lender is noteworthy because of the firm’s development chops: It is one of the lead developers on Dumbo Heights, a mixed-use complex that includes 963,000 square feet of office space,and also teamed up with RFR Realty on the $700 million purchase of two other Dumbo buildings owned by the Jehovah’s Witnesses. The company is also planning a project in Gowanus at 175-225 Third Street.

A representative for JDS, which is led by Michael Stern, declined to comment. A spokesperson for Kushner Cos. confirmed the firm is a mezzanine lender but declined to comment further.

Kushner Cos. quietly launched a real estate lending platform earlier this year, joining the growing number of New York development firms branching out into the financing business.

The firm plans to issue senior loans, mezzanine debt and preferred equity ranging from $20 million to $500 million in value with terms of up to five years, according to an email advertising the program reviewed by TRD. The company plans to lend on properties in Greater New York, Miami, Los Angeles, Washington, D.C., San Francisco and Boston. Kushner, along with his brother Joshua, is also a co-founder of Cadre, a real estate investment platform.

The Moinian Group also launched a similar platform. The development company is now offering senior real estate loans of $15 million and more, as well as mezzanine debt and preferred equity of $10 million and more. Moinian will initially focus on the New York area, Miami and Los Angeles, and plans to issue loans on all property types with terms of up to five years.

Others in the lending game include Scott Rechler’s RXR Realty and RFR, which is led by Aby Rosen and Michael Fuchs. Lending offers firms a shot at stable returns at a time when high land prices and a slowing real estate market make it harder to earn fat profits as developers or as outright buyers of properties. Banks’ growing reluctance to fund certain types of real estate projects also creates an opening.

“When there’s volatility you want to decouple yourself from broader market trends to try and find investments where you can capitalize on the impact of that volatility,” Rechler told TRD in February, explaining the company’s decision to issue mezzanine loans.

From the archives: Macklowe’s bust, one of many over decades

Harry Macklowe and Donald Trump

Harry Macklowe and Donald Trump

Whatever befalls beleaguered landlord and developer Harry Macklowe and his property empire, his travails are part of a long line of epic busts in New York City real estate. As he and others before him demonstrate, even Gotham’s biggest builders fall from time to time.

Well-known busts include Rockefeller Center Properties, which was forced to file for bankruptcy in the 1990s when it was owned by the Japanese-based Mitsubishi Estate Company, and Donald Trump, whose entertainment company emerged from bankruptcy in 2005

Looking at developers who have gone bust and bounced back, from Trump to Zeckendorf

May 14, 2016 01:00PM
By  Dan Ackman

Macklowe’s bust one of many over decades

March 31, 2008

Whatever befalls beleaguered landlord and developer Harry Macklowe and his property empire, his travails are part of a long line of epic busts in New York City real estate. As he and others before him demonstrate, even Gotham’s biggest builders fall from time to time.

When they do fall, they generally follow the Macklowe model: A developer builds or buys a trophy property, pledges it as collateral, becomes overextended and the entire empire topples. “That paradigm happens often,” said Tom Shachtman, author of “Skyscraper Dreams: The Great Real Estate Dynasties of New York,” adding, “The bigger you are, the more collaterized you are.”

Well-known busts include Rockefeller Center Properties, which was forced to file for bankruptcy in the 1990s when it was owned by the Japanese-based Mitsubishi Estate Company, and Donald Trump, whose entertainment company emerged from bankruptcy in 2005. Other less prominent examples echo the experience of Macklowe, who seems headed toward a resolution of his $5.8 billion default to Deutsche Bank. It will end in the surrender of seven buildings purchased with billions of borrowed dollars, thanks to a credit crunch that’s jacked up the price of financing deals in the wake of the subprime mortgage collapse.

Indeed, many of the largest real estate players survived bankruptcy and re-emerged as builders (or, in Trump’s case, also as television personalities).

With Shachtman’s help, The Real Deal has compiled a list of the biggest tumbles by New York City developers. Call them skyscraper nightmares.

Henry Mandel

Henry Mandel was one of the premier developers of the 1920s. He built hotels like the Lombardy and the Tuscany and an office tower in Pershing Square. Two of his grandest projects were the London Terrace apartments, a project for which Mandel acquired four city blocks in Chelsea and demolished 80 homes on the site, and the Park Vendome on 57th between Eighth and Ninth avenues.

Mandel’s crash came during the early years of the Depression. It was triggered not by his big deals, but by one of his small ones.

Mandel owned a modest building off Union Square. In 1931, a creditor who held a $40,000 mortgage on the Union Square property commenced foreclosure proceedings. Mandel, busy juggling the leasing on London Terrace and the building of the Park Vendome, was strapped, distracted by a messy divorce, and was ultimately unable to pay. In 1934, the Union Square foreclosure was granted. Three months later, Mandel was forced into personal bankruptcy, and his $36 million empire (big money in those days) was dispersed to creditors.

Bill Zeckendorf Sr.

In the 1950s and early 1960s, Bill Zeckendorf Sr. and his company Webb & Knapp controlled what Time magazine called the world’s largest real estate empire. Zeckendorf, who smoked foot-long cigars and hobnobbed with presidents, was so fond of credit that he once remarked, “I’d rather be alive at 18 percent than dead at prime rate.”

He owned hotels, office buildings, shopping centers and housing developments in 17 states, not to mention Canada. His portfolio included the Chrysler Building and the Century City site in Los Angeles.

Zeckendorf’s fall was triggered, Schachtman said, by his plan to build a hotel — the Zeckendorf — at 51st Street and Sixth Avenue. Zeckendorf broke ground, but the property sat as an empty hole. It was bleeding cash, and efforts to sell the site failed.

Hilton Hotels expressed interest, but ultimately built two blocks north. In 1965, Zeckendorf’s company declared bankruptcy, and its properties were sold off. But his family real estate business came back. Today his grandsons, William and Arthur, who developed 15 Central Park West, are two of the biggest developers in the city.

Alan Tishman

Until the mid-1970s, the Tishman family operated as one firm, the Tishman Realty and Construction Company.

The breakup into three separate companies was partly influenced by the city’s financial crisis and the sharp downturn in real estate that accompanied it. But it was directly triggered by problems with 1166 Sixth Avenue, an office tower the family started building in 1973. The project began with an informal agreement by the one-time communications giant General Telephone and Electronics to lease a third of the building. But after construction began, GTE’s headquarters was bombed in protest of the Vietnam War. Despite Alan Tishman’s urging, the company headed to Connecticut (as many were doing at the time). Tishman was left with a half-built tower and no tenants.

In 1976, Tishman walked away from the property, which was taken over by Equitable Life Insurance. The Tishman family divided its interests into three firms: Alan headed the management company, his brother, Bob Tishman, and Bob’s son-in-law, Jerry Speyer, took control of the development firm, and the construction company was sold to Rockefeller Center Corp. It was later bought back by company executives.

Peter Kalikow

Like Donald Trump, Peter Kalikow was heir to a real estate fortune based in the outer boroughs and moved to Manhattan.

Also like Trump, Kalikow dabbled in takeovers (he bought a big chunk of CBS) and in media, buying the New York Post in 1988. The money-losing Post, by Kalikow’s own reckoning, was a huge distraction.

While he was focused on the paper and its turmoil, he also borrowed around $250 million to build the Millennium Hotel and purchase a collection of small apartment buildings in the east 70s. He planned to knock them down and make way for a luxury high-rise. The plan fell in the wake of tenant opposition. By 1991, he was forced into personal and business bankruptcy. His personal debt exceeded $350 million; his companies owed more than $1 billion. By 1994, though, Kalikow had rebounded strongly enough to be named a board member of the MTA. In 2001, he became the board’s chairman.

Ian Bruce Eichner

In the late 1980s, Ian Bruce Eichner emerged from relative obscurity as the builder of 1540 Broadway, a 44-story office tower in Times Square. While there were problems with construction — including the need to shore up the neighboring Lyceum Theater, which developed a dangerous crack, and the complications of an enormous electronic display on the façade — the main problem was that while the building was going up, the office rental market was coming down.

As the project proceeded without guaranties from major tenants, bankruptcy ensued. The whole episode is captured in “High Rise: How 1,000 Men and Women Worked Around the Clock for Five Years and Lost $200 Million Building a Skyscraper,” an entertaining 1993 book by Jerry Adler. Eichner reemerged as a developer in Florida and Las Vegas (where he has run into financial difficulties anew) as well as in New York.

Olympia & York

After buying nine New York skyscrapers during the 1970s recession and winning the rights to develop Battery Park City, Olympia & York emerged as the largest property company in the world. The company’s biggest difficulty was not in New York or Toronto, where it was formed, but in its London Canary Wharf project.

Problems in London were felt throughout the Olympia & York empire. With the company owing nearly $20 billion, founder and chairman Paul Reichmann was forced to resign in March 1992. The company filed bankruptcy in Canada later that year. By 1996, it had emerged with a new name, World Financial Properties (now part of Brookfield Properties), and still owned 11.5 million square feet of office and commercial space. Reichmann made his own comeback as a developer and fund manager and for a time even regained control of Canary Wharf, which has become a huge success as well.


Chinese regulators to investigate Anbang amid real estate push

Insurance Regulatory Commission fears liquidity mismatch

May 09, 2016 01:00PM



The Waldorf-Astoria (inset: Wu Xiaohui)

China’s insurance regulator plans to investigate Anbang Insurance Group amid its recent U.S. real estate investment binge.

According to a source quoted by Bloomberg, the China Insurance Regulatory Commission is putting together a team of inspectors to look at Anbang’s business model. The agency last week announced stricter oversight of insurance companies’ investments in real estate and private equity.

Anbang, which began a little over a decade ago as a regional car insurer and has close ties to China’s ruling elite, has been one of the most active foreign investors in U.S. real estate over the past two years. It recently bought the hospitality real estate investment trust Strategic Hotels and Resorts (Including the Essex House on Central Park South) from Blackstone for $6.5 billion and entered a $14 billion bidding war for Starwood Hotels & Resorts before mysteriously bowing out. In January 2015, it shelled out $1.95 billion for the Waldorf Astoria Hotel.

Regulators fear that insurers’ focus on relatively illiquid assets like real estate could lead to a liquidity mismatch – meaning they wouldn’t be able to pay off investors and policyholders in the event of a capital run. [Bloomberg] — Konrad Putzier

The week in real estate market reports

A weekly feature bringing you the industry’s latest intel

May 04, 2016 03:55PM
By Kyna Doles

Market Reports

(credit: REBNY and Newmark Grubb Knight Frank)

Sales activity surged last quarter in the Bronx and Staten Island while it tapered off in Manhattan and Brooklyn compared to the same period last year, according to the latest report from the Real Estate Board of New York. Manhattan also saw an influx of office deals centered in Midtown and overall asking rents were up slightly in the first three months. Check out more in our roundup of the week’s real estate market reports.


Q1 2016 New York City residential sales: REBNY

The Bronx and Staten Island saw a 35 percent spike in sales activity during the first three months of the year compared to last year. With higher average prices in Manhattan and Brooklyn, sales dipped 2 and 4 percent respectively. Read the full report here.

Manhattan luxury contracts April 18-24: Olshan Realty

Twenty-one contracts were signed during the third week of April for Manhattan homes priced $4 million and above, compared to 41 contracts signed during the same period last year. Only one of those pads was a co-op. Read the full reporthere.


Q1 2016 New York City office leasing: Savills Studley

Overall asking rents in Manhattan rose to $74.53 per square foot in the first quarter, leasing activity jumped to 7.5 million square feet and the availability rate for Midtown’s Class A buildings is up slightly to 11.9 percent. Read the full report here.

Q1 NYC multifamily sales: Ariel Property Advisors

The New York City multifamily market grossed nearly $4 billion in sales during the first quarter of the year, mostly unchanged year-over-year. Deals are growing pricier, even as building and transaction volume fell over last year. Read the full report here.

Brooklyn-Queens streetcar assessment: NYCEDC

The proposed Brooklyn-Queens streetcar could bring in as much as $3 billion in new property tax revenue over the next 40 years. A new public transit car could also boost development along the tracks by 5 percent. Read the full report here.

April 2016 Manhattan office leasing: Newmark Grubb Knight Frank

Most of the 3.5 million square feet leased in April was concentrated in Midtown and driven by financial, insurance and real estate tenants