The crown of 50 West at sunset. Photo by quallsbenson.

By:Rebecca Baird-Remba 8:00 am on February 13, 2017

The Helmut Jahn-designed, 64-story skyscraper at 50 West Street is nearly complete and ready for residents, YIMBY has some stunning new photos, shot from a helicopter, of the 784-foot-tall tower in the Financial District.

Time Equities developed the luxury building, which features a curved facade and offers panoramic, floor-to-ceiling views of the World Trade Center, New York Harbor and the Hudson and East rivers.

A northeast facing view of 50 West Street, with 40 Wall Street and the Manhattan Bridge in the background. Photo by quallsbenson.

Buyers started closing on condominium purchases last month, and the developers just unveiled two new model units. Asking prices for the development’s 191 units start at $1.76 million, and two dozen units are still up for grabs on StreetEasy, including a three-bedroom, three-and-a-half-bath penthouse for $24.54 million. Sales have evidently been stop and go, because the first units in the building hit the market two and a half years ago. The tower has been in the works since 2007, but the recession derailed construction until 2013.

The building now has a temporary certificate of occupancy, and owners are expected to start moving in over the next few months. Construction is scheduled to finish this spring.

A nighttime view of 50 West. Photo by quallsbenson.

Famed Danish designer Thomas Juul-Hansen handled the interiors, which are outfitted with marble vanities, marble floors and rain showers.

The development will also offer four floors of amenities, including a landscaped rooftop called The Observatory at 50 West, an entertainment floor with private dining room and terrace, a fitness center and The Water Club, which has a 60-foot-long pool, a Jacuzzi, steam room and sauna.

A night-time facade closeup. Photo by quallsbenson.

There will also be a small commercial component to the project: the third floor will have 15 office condominiums and a conference room.

Like many of the city’s tallest towers, this one comes with some privately owned public space. Time Equities is creating a 6,800-square-foot public plaza with an art gallery, cafe, plantings, tables, and chairs. The plaza was originally supposed to generate a zoning bonus for 50 West. But after the financial crisis, the developers scaled down the size of the tower and chose not to use the bonus, the Wall Street Journal reported in July.

50 West makes its mark on the Lower Manhattan skyline. Photo by quallsbenson.

The space will serve as a landing for the 230-foot-long West Thames Street Bridge, which will ferry thousands of commuters across six lanes of West Street every day. The bridge has been in the works for nearly a decade and will replace the Rector Street Bridge, a structure erected to temporarily replace a pedestrian bridge destroyed on September 11, 2001. The cost of the project has swelled from $20 million to $40.5 million over the years. $33 million will come from the Department of Housing and Urban Development, and Battery Park City Authority, which will be responsible for maintenance, is contributing $8.2 million. The city finally started work on the bridge in November.

50 West looks like it should dominate the skyline, but it doesn’t even crack the top ten tallest towers in the Financial District. It’s slightly shorter than the century-old Woolworth building, which reaches 792 feet above Broadway. The Robert A.M. Stern-designed Four Seasons condo-hotel at 30 Park Place was finished last year and stands 937 feet tall. Gehry’s wavy condo tower at 8 Spruce Street has a height of 870 feet, and the 71-story 40 Wall Street (pictured above), an office tower controlled by President Donald Trump, is 927 feet tall. One World Trade Center remains the loftiest in the neighborhood and the city, at 1,776 feet tall.

A northwest facing view of 50 West Street, with New Jersey in the background and One World Trade Center on the right. Photo by quallsbenson.

January 09, 2017 08:16AM

Construction at 185 Bowery and a rendering of citizenM’s hotel (credit: the Rinaldi Group)

Hotel developer and operator citizenM is planning the 20-story, 300-room project at 185 Bowery.  A Dutch company constructed the building in Poland and shipped it to New York in 210 pieces, the Wall Street Journal reported.

CitizenM, which has nine hotels operating and 14 in development, has used modular construction to build the majority of its properties in Europe, where the technique is widespread.

While the method isn’t always less expensive than traditional construction, it does allow for quicker assembly. CitizenM’s hotel, co-owned by Brack Capital Real Estate, is expected to take three to four months to finish, compared to six to nine months using traditional methods.

 

It will also cut down about 1,200 truck deliveries to the site.

“That is the beauty of modular construction,” said Anthony Rinaldi, of  construction manager the Rinaldi Group. “It really minimizes disruption to the neighborhood, to the community, to the traffic flow.”

New York’s fledgling modular industry is hoping the project will be a boon, illustrating the time-saving benefits.

“So much centers on how quickly you get the hotel full,” said Roger Krulak, chief executive of Brooklyn-based Full Stack Modular.

In October, Full Stack bought Forest City Ratner’s modular-building business, ending the developer’s brief and largely unsuccessful foray into the world or prefabricated construction. [WSJ] – Rich Bockmann

• Fortis Editors Note: we publish the following article with guarded optimism for the success of the new administration. But more importantly, we hope that he succeeds in all burdens that weigh so heavily on the Presidency.  As a measure of reality soon encompasses and removes the campaign bluster, we sincerely hope that the President elect carefully chooses the correct path for our people. The Real Estate sector would certainly want to see prosperity and gains in our dealings, but not at the expense of  people and institution’s less fortunate or simply in the wrong place and time.   The shoes of the Presidency are quite a burden to fill, and we wish the soon to be new “President” Trump success and triumph, for our sake and the worlds. God Bless America and Happy New Year!   DJM, MD  Fortis Investment Group  

December 01, 2016
By Kenneth R. Harney

Could the election of Donald Trump have unanticipated impacts on the federal tax code’s benefits, which favor  homeownership over renting?

To the extent that the House, Senate and White House soon will be under one party’s control, the answer may well be yes. Though housing issues got scant attention during the campaign, Trump’s tax reform plans, linked up with versions already proposed on Capitol Hill, could contain some jolts for many people.

Late in the campaign, Trump revised his earlier tax plans in ways that make it more compatible with House Republicans’ tax “blueprint” issued this past June. Trump would collapse the current seven tax brackets for individuals to just three: For married joint filers with incomes less than $75,000, the federal marginal tax rate would be 12 percent. For those with incomes of $75,000 but less than $225,000, the rate would be 25 percent. From $225,000 up, the rate for married joint filers would be 33 percent. Single-filer rates would have the same brackets but be based on incomes half the amounts for married joint filers. The capital gains rate would remain capped at 20 percent, and the controversial 3.8 percent “Obamacare” surtax on certain investment income would disappear.

Now it gets more intriguing: To simplify the tax system and wean more taxpayers from itemizing deductions on Schedule A of their returns, the Trump plan would boost the standard deduction for joint filers to $30,000 (up from the current $12,600) and raise it to $15,000 for single filers, instead of $6,300 at present. For very high income earners, there would be a limit on all itemized deductions of $200,000 for married joint filers and $100,000 for singles.

There’s no mention here of limits on mortgage interest deductions, so from strictly a homeowner or buyer perspective, nothing jumps out as objectionable. Simplicity is good. In fact, the original Trump tax plan exempted the mortgage interest and charitable deductions from the sorts of modest limitations contained in Hillary Clinton’s proposal.

But here’s a key question: With a substantially increased standard deduction of $15,000 to $30,000, how many homeowners will want to file for mortgage interest or property tax write-offs, as many do today. The chief economist of the National Association of Home Builders, Robert Dietz, estimated that the number of itemizers might drop from the current 25 percent of taxpayers to anywhere from just 5 percent to 10 percent.

Is that a problem? It depends on how one views the longtime tax code preferences for encouraging ownership of homes over renting. One analysis, provided by Evan M. Liddiard, senior federal tax policy representative for the National Association of Realtors, maintains that if the standard deduction is raised dramatically, “itemized deductions become less relevant,” and previously valuable and distinctive “tax incentives [for] homeownership evaporate even while taxes are not necessarily being reduced.” There’s less incentive to own rather than rent.

Dietz put it this way: When you decrease the attractiveness of a longtime subsidy devoted to encouraging purchases by lowering financing costs, “the economics would reduce the tax benefit for homeownership.” Such a change could “increase the after-tax cost of paying the mortgage,” he said.

Tax reformers see the issue starkly differently. Most comprehensive proposals that have been made in recent years, notably the landmark, bipartisan Simpson-Bowles National Commission on Fiscal Responsibility and Reform, call for wholesale elimination or sharp reductions of special interest carve-outs in the tax code.

But could limiting or ending homeownership tax preferences have the side effect of lowering home values and selling prices? Academic researchers suggest the answer is yes. A new paper from an economist at the Federal Reserve estimates that eliminating the mortgage interest deduction alone would cause the average household to lose
“10.9 percent of the value of the house, with homeowners losing 11.5 percent and homebuyers 8.5 percent.”

The Fed study did not address the type of tax plan contemplated by Trump or Capitol Hill reformers but appears to agree with the broad conclusion of earlier researchers: When you diminish the value of a subsidy benefit from a favored asset category, the value of that asset to potential buyers or owners is likely to drop.

None of this is happening yet. Months of committee hearings and debate — and lobbying — are guaranteed before any tax plan gets to the president’s desk. But it’s an indication of what’s on the line for real estate.

Kenneth R. Harney is a syndicated columnist.

Best Wishes for a Great Holiday Season

From all of us at Fortis

By Matt A.V. Chaban     New York Times Dec. 13, 2016

It has taken more than two years to resolve the bureaucratic quagmire of backlogged buildings at the New York City Landmarks Preservation Commission. Considering that some have been in limbo for four decades, it may have seemed like no time at all.

“This is really a mammoth undertaking,” Meenakshi Srinivasan, the chairwoman of the commission, said at a hearing on Tuesday at which the agency considered the fate of the final 13 of 95 properties on its backlog. “We can change the course of the commission’s practice to be better, more responsible, and timely. The process has been efficient, transparent and also incredibly rigorous, essentially starting from scratch and going back to all of these buildings.”

Ten buildings were designated as official landmarks on Tuesday, including the Bergdorf Goodman department store on Fifth Avenue. Of the remaining three, two did not win landmark protection, while a decision on the third was delayed. Preservationists said they wished more had been saved, but were grateful that in clearing its backlog the commission had granted landmark status to 27 properties over the past nine months, including the Pepsi-Cola sign on the Queens waterfront.

The commission’s votes Tuesday were a reminder of how the backlog grew and offered a window into the workings of the group as it grappled with the competing interests of property owners, preservationists, civic groups and politicians.

Photo

“We’re pleased they’ve addressed the backlog; no one likes the backlog,” said Simeon Bankoff, executive director of the Historic Districts Council. “But there were a substantial number of significant buildings that were not protected, and not protected because of political calculations.”

The Bergdorf building, which was designed by Ely Jacques Kahn and completed in 1928, is an example of a property that had been caught in a tug of war. The store had opposed designation since it was first proposed in 1970, but support from the community, particularly Gale Brewer, the Manhattan borough president, helped the building ultimately win protection. The Immaculate Conception Church of the Blessed Mary, Convent, & Priests’ Residence in the Morrisania area of the Bronx was not designated, however, because of opposition from the parish and the local councilman. The council has the option to veto the commission’s decisions so the agency is reluctant to make decisions the council is likely to overturn.

One exception on Tuesday was the Loew’s 175th Street Theater. Councilman Ydanis Rodriguez and Representative Charles B. Rangel have supported the United Palace, a congregation and cultural center that now owns the theater and opposes designation. Nevertheless, the commission wanted to protect the property because the former movie palace is a rare example of the extravagant Indo-Persian architectural style.

Debates over the fates of buildings have intensified since Mayor Bill de Blasio took office two years ago and focused on the development or preservation of 200,000 units of affordable housing.

Photo

The real estate industry and critics of preservation have seized on the chance to seek changes, including clearing the backlog of cases before the commission. Initially, the commission was going to clear the backlog in late 2014 without considering any of the properties, a move that drew an outcry and was quickly reversed.

Many owners oppose landmark status because of the burden of receiving approvals for renovations, and fears that changes could be rejected outright.

Among the structures that were designated landmarks on Tuesday were a YMCA building in Harlem where the writers Langston Hughes and Richard Wright once lived and Paul Robeson sang; the Excelsior Power Company building on Gold Street in the Financial District; churches in Flushing, Queens, and Bushwick, Brooklyn; one of the last wood-framed houses on the Upper East Side; and two Colonial-era houses on Staten Island.

The Edgar J. Kaufmann rooms, designed by Alvar Aalto, did not win protection in part because they are in a building at the United Nations with high security and limited public access. The panel continues to work with Consolidated Edison to preserve the IRT Powerhouse on 12th Avenue while allowing it to operate as a steam plant.

The commission has held two other hearings on backlogged properties since spring, at which such recognizable sites as the Vanderbilt Mausoleum on Staten Island gained protection.

Donald Trump and the other forces poised to shape the city’s economy in 2017. Some industries will fare better than others

By Greg David

Photo: Buck Ennis

Wall Street has been slow to replace jobs lost in the Great Recession. Trump’s presidency could give profits a boost.

In 2014 and 2015, New York City added a quarter million jobs, something that had never been done. The news isn’t as good for this year, and won’t be for 2017, but make no mistake: The city’s economy continues to prosper as sectors from tech to tourism to accounting to advertising—and especially health, education and the city government—continue to expand.

The great unknown is what President Donald Trump will mean for New York. His plan to cut taxes and add to infrastructure spending could provide a fiscal stimulus. His determination to roll back regulations on Wall Street could help this crucial industry that has been, at best, treading water. But he could also slash aid to the city and state over immigration reforms or set off a disruptive trade war that would upend all the assumptions.

Economists who specialize in the local economy agree that the city will end 2016 with an increase of about 80,000 jobs, a good performance by historical, if not recent, standards. Their forecasts for next year suggest a similar uptick.

The metro area’s $1.6 trillion gross domestic product, the largest in the country ahead of Los Angeles, and a 20% increase since 2013, according to the federal Bureau of Economic Analysis. The best news is that wages are rising faster here than they are in the rest of the country. Median household income in New York jumped 5.1% to $55,752 in 2015 and is now back to prerecession levels. Another jump is likely for this year and next, in part because of the big minimum-wage hike coming at the end of 2016.

But despite the recent Wall Street rally, a Trump presidency may not have much of an impact on the city’s fortunes, at least for the first half of the year.

Mark Zandi, the chief economist of Moody’s Inc.—and a solid Democrat—said the national economy is doing so well, and the Trump team is so unprepared, that it will be months before policies that affect economic growth will start to take shape. But as next year progresses, Trump’s priorities will start to matter, especially for the securities industry. The recent news on Wall Street has been pretty bad: The sector has not regained the jobs lost in the recession, profits have fallen for two consecutive years and the state comptroller has predicted bonuses will drop again next year. While it may not be as important as it was from 1980 to 2008, the financial market is still the city’s most important sector because of the outsize pay. Less than 5% of city jobs come from Wall Street, but the industry accounts for more than 20% of all income in the city and more than 20% of all state tax revenue. With financial stocks fueling the Trump rally, investors are betting that the next president will unshackle the industry from regulation, resulting in soaring profits and a boost in bonuses, furthering accelerating local gains.

But not all sectors will be winners in 2017. While the city expects to set another tourism record of 60 million visitors this year, the increase is relatively small. Without substantially more visitors, room rates will come down because so many new hotel rooms are coming on line. International visitors are also shopping less and retail employment in Manhattan is falling as a result.

Vacancy rates are increasing for the most expensive apartments as well as for retail and office space. There is clearly a glut of superluxury units, and retailers simply can’t pay what landlords are asking for, given the erosion of their businesses to online shopping. The strength of residential construction may depend on the resolution of the 421-a tax break controversy, and office rents will remain weak thanks to what looks to be a temporary glut of space. Taken together, the overall economy is likely to be a big plus for Mayor Bill de Blasio as he seeks reelection. If it falters, he can always blame President Trump.

November 01, 2016
By Marynia Kruk

The EB-5 visa program, which grants foreigners a provisional right to live, work and study in America in exchange for investing at least $500,000 in job-creating business ventures, was extended once again in late September. But, in this case, only until Dec. 9, at which point the program will likely face significant changes if it doesn’t expire or get another short-term extension. And a major beneficiary of the policy — the New York City real estate industry — is closely watching the various proposed overhauls. Major developers including Forest City Ratner Companies, the Durst Organization, Silverstein Properties and Related Companies have taken low-cost loans from the program’s aspiring immigrants and used them to plug financing gaps on projects throughout the city.

Enthusiasm for such an arrangement isn’t surprising if one looks at the math. Foreigners agree to a below-market return on their investment (reportedly 1 percent in some cases) because they get something else out of it: a United States green card. Meanwhile, developers are able to reap the benefits of cheap financing by acting as middlemen for something that costs them nothing, another individual’s path to citizenship.

What is surprising is how long it took for EB-5 to gain traction. While Congress created the program in 1990 to help stimulate the U.S. economy, applications didn’t begin flooding in until after the 2008 financial crisis. That’s when developers’ and other entrepreneurs’ need for financing dovetailed with the desire of foreigners — overwhelmingly mainland Chinese citizens — to gain entry to the States. Most recently, EB-5 has become a victim of its own success.

A waiting list has made it less appealing for those who initially found the program’s quick turnaround enticing. In the first half of 2016, applications plunged 51 percent from a year earlier, according to the U.S. Citizenship and Immigration Services agency. And as major reform proposals get floated, including a potential increased price of entry, the possibility remains that all the scrutiny could doom the program in the long run. As the debate rumbles on, TRD takes a look at what stakeholders and opponents have said in recent months and throughout the years.

(Click to enlarge)

November 15, 2016 04:43PM
By Katherine Clarke and Grabrielle Paluch

Jared Kushner and Chris Christie

New Jersey Gov. Chris Christie has had quite the week. First he was removed as the head of President-elect Donald Trump’s White House transition team. Now, his allies are being booted too. At the helm of that effort? None other than real estate developer Jared Kushner, Trump’s son-in-law and close consigliere.

Kushner is reportedly throwing Trump’s transition efforts into disarray by pushing out personnel who were tapped by Christie, Bloomberg reported. Former House Intelligence Committee Chairman Mike Rogers, who was tapped by Christie to lead national security planning, was among those ousted in recent days. The Kushner Companies CEO reportedly fought against having Christie on Trump’s election ticket, ruining his chances of becoming the country’s VP. It reads like a modern twist on “The Count of Monte Cristo.”

So what exactly is Kushner’s disdain for Christie? His distaste for the politician has been widely documented and linked to Christie’s involvement in the prosecution of Kushner’s father Charles Kushner, who was sentenced to prison in 2005 on 18 counts of tax evasion, witness tampering and making illegal campaign donations.

But to fully understand the genesis of the bad blood, you must look back to 2005, when Christie, then U.S. Attorney, pounded his chest over his success in getting a guilty verdict in the Kushner case. He’d pushed for Kushner to be sentenced to three years for his crimes, which included hiring a prostitute to seduce his brother-in-law and capture it on videotape in an act of retaliation against his sister, a witness for the prosecution. He told the New York Times that Kushner had failed to show an “acceptance of responsibility” in the case.

Kushner was ultimately sentenced to two years and served one. It sank his career and his chances of becoming the Chairman of the Port Authority of New York and New Jersey.

“It shows that no matter how rich and powerful you are in this state you will be prosecuted and punished for crimes you commit,” Christie said in a statement at the time. “This sends a strong message that when you commit the vile and heinous acts that he has committed you will be caught and punished.”

The win was said to have helped the sharp-tongued Christie brand himself as a tough-on-corruption candidate in preparation for his run for governor in 2009.

A young Jared Kushner, who’d learned of his father’s arrest while interning at then-Manhattan District Attorney Robert Morgenthau’s office, took the news particularly hard. In 2013, he told The Real Deal that he’d even changed his career course because of the handling of his father’s case.

“My dad’s arrest made me realize I didn’t want to be a prosecutor anymore,” he said. “The law is so nuanced. If you’re convicting murderers, it’s one thing. It’s often fairly clear. When you get into things like white-collar crime, there are often a lot of nuances. Seeing my father’s situation, I felt what happened was obviously unjust in terms of the way they pursued him. I just never wanted to be on the other side of that and cause pain to the families I was doing that to, whether right or wrong. The moral weight of that was probably a bit more than I could carry.”

But Kushner and his father’s beef with Christie goes even deeper than his father’s prison time. They have also taken issue with the politician’s close relationship with Charles’ brother, Murray Kushner. The criminal proceedings against Charles reportedly stemmed from complaints made to federal election regulators by Murray. Beyond that, Murray continued to donate to the New Jersey Republican Party even after his brother was incarcerated.

There were allegations of impropriety, with the Kushners intimating that Murray had not come under the same legal scrutiny as his brother, the Newark Star-Ledger reported.

Charles and Murray had an acrimonious relationship from childhood. In 1999, it was Murray who scuppered a bid by Kushner Companies to acquire Berkshire Realty. The deal would have catapulted the Kushners into the top ranks of private real estate firms in America. The Blackstone Group ultimately won control of the real estate investment trust and its nearly 25,000 units with a $1.3 billion bid.

Charles also questioned Murray’s family life, primarily because he had married a shiksa (a gentile) named Lee. During Passover in 2000, an argument boiled over, leading Murray to tell Charles that if they were incapable of being partners, then they “can’t be brothers.” Shortly after that, Murray sued Charles over money he was allegedly owed from real estate partnerships, but the case was settled in arbitration and remains sealed.

Kushner put his father’s missteps behind him.

“My father made a mistake and he paid a big price for it, but he’s my father,” he previously told TRD. “He’s given me everything I have in terms of the skills and the training and taught me about being a man. I feel extremely lucky to have him in my life.”

But, in the case of Chris Christie, forgiveness may not come as easily.

November 11, 2016 10:50AM

Trump Tower at 725 Fifth Avenue and Donald Trump

It’s a hard-knock life for the residents of Trump Tower right now, and some are considering jumping ship.

Protesters are making it difficult for residents to get in and out of the building, where the president-elect lives in a triplex penthouse, the New York Post reported. Security at the Fifth Avenue tower is ramped up. So, according to the Post, some residents are mulling selling their units.

“They can’t get into their own homes without being stopped and frisked and having to show ID,” one broker told the Post. “These are wealthy people. They don’t need this, and they can’t take it any longer. They no longer want to stay there. Some of them are already planning on moving out, and they’ll decide later whether or not they want to sell.”

Before Tuesday’s election, the Secret Service warned that if Trump won the election, he shouldn’t stay at his penthouse at Trump Tower when he visits New York. At the time, officials told the Post that the building’s security measures weren’t president-ready. [NYP] — Kathryn Brenzel 

November 01, 2016
By Hiten Samtani and Will Parker

Vornado’s Steven Roth and One Penn Plaza

“Don’t be jerky,” Steven Roth told Gary Barnett. “It’s not even close.”

Sitting among other industry titans at Bloomberg LP’s headquarters last spring, Roth was in full troll mode. Barnett had dared to suggest that One57, his cathedral for the 0.1 percent, was better than Roth’s luxury condo tower in the works at 220 Central Park South. And when Jeff Blau spoke about the upcoming condos at Hudson Yards, Roth quipped that his firm, the Related Companies, was “selling to the suckers.” Of his lender at 220 CPS, the Vornado Realty Trust chairman and CEO said: “I’m in the suck-up business to the Bank of China.”

The chiefs of public companies tend to be careful to a fault about what they say in public. Not Roth, who is one of the last in a line of brash hustlers running blue-chip real estate investment trusts — very much in the vein of Sam Zell, whom he’s referred to as a “bald-headed chicken fucker.” At the same time, Roth has shown remarkable patience in turning Vornado, once a developer of New Jersey industrial properties and strip malls, into the $40 billion behemoth, with more than 30 million square feet of New York City holdings, it is today.

Vornado is now one of the largest owners of commercial property in Manhattan. And there is near-universal acclaim within the industry for the way that Roth has managed the company since Michael Fascitelli — his golden boy and former heir apparent — stepped down as CEO in 2013. The REIT made good on its promise to simplify its portfolio, shedding some of its troublesome fringe investments and doubling down on its prime New York retail holdings.

Vornado’s discipline has given it a fortified balance sheet that now allows it to make transformative bets, including the repositioning of 8 million square feet of office space in Penn Plaza, the $1.6 billion redevelopment of Moynihan Station and 220 CPS, the luxury market’s new prom queen.

A rendering of 220 Central Park South in Midtown (credit: Vornado)

Roth has championed the bulk of those initiatives, and his power at the company is absolute.

“He runs his company as if he owned it all, and his shareholders benefit from that,” Richard LeFrak, CEO of the LeFrak Organization and a close friend of Roth’s, told The Real Deal.

But the Vornado chief, who is now pushing 75, has yet to announce a clear successor — a glaring lack of transparency for a public company with an aging CEO. This makes some Vornado shareholders nervous about the REIT’s fate when he finally calls it quits. Will he leave a void that’s impossible to fill?

“It’s akin to the Grateful Dead,” said Alexander Goldfarb, an analyst at investment bank Sandler O’Neill. “No one wants to see the warm-up band.”

What makes the succession issue particularly grating for the REIT’s shareholders is that the many of Vornado’s biggest competitors appear to have figured it out.

Stephen Green, founder of SL Green Realty Corp., brought in Marc Holliday as the firm’s chief investment officer in 1998, and Holliday, who’s 50, has been its CEO since 2004. His second-in-command, Andrew Mathias, is in his mid-40s.

Meanwhile, Boston Properties’ founder, Mort Zuckerman, named Owen Thomas, a relative outsider, CEO in 2013. Thomas, who came to the REIT from Lehman Brothers Holdings — where he helped the underwater firm unravel its real estate assets — is 54. Related’s Blau, who started at the firm in the early 1990s and became its second CEO in 2012, is 48.

“Some companies will choose to be very upfront with it, and some companies will choose to keep it in the dark,” said John Guinee, a REIT analyst at financial services firm Stifel, Nicolaus & Co. “Usually what happens is, if they think they need to go outside the firm and hire an executive recruiter, then they go public with it. But in other cases, if they think that the candidate is internal, then they will keep it hush-hush.”

Greedy No. 1

But Roth has been known to pull rabbits out of his hat before.

Back in 2006, he had just acquired a prime retail site at 1540 Broadway, in a $260 million, all-cash deal. But Virgin Megastores had a 200-year lease in place, at 15 percent of market value. Unless Virgin left, the deal was a dud.

“We went upon a two-year mission to buy them out, and we flunked,” Roth recalled during an April 2011 quarterly luncheon hosted by the Real Estate Board of New York. “What we eventually did was we teamed up with Related, who had a similar situation in Union Square, and we bought the whole damn Virgin Record company operation in the United States, 20-some odd stores.”

He then pointed to a chuckling Stephen Ross, sitting next to him, and said: “Just so Greedy Number 1 could get his hands on it, and Greedy Number 2 could get that — and it worked!”

When reminded of the story last month, Ross laughed. “I love Steve Roth,” the Related chairman said, “[but] he’s greedier.” 

Acquiring a company for its underlying real estate was a textbook move for the Vornado chief.

Born in Brooklyn to a father who made children’s dresses, Roth attended DeWitt Clinton High School in the Bronx, whose alums include Bill Zeckendorf and Lewis Rudin. He got his start in real estate in the 1970s, building industrial properties in the New Jersey Meadowlands. But what made him a real player was buying a controlling interest in the Alexander’s department store chain in the 1990s.

“Alexander’s had a very big and important store in Paramus,” Roth told Crain’s last year. “And I’m sitting there and I’m driving past it and my wife goes, ‘If you’re so smart, why don’t you buy that?’ The next day I bought my first shares of stock in that company. The real estate was worth many multiples of what the retail business was, and the rest is history.”

Michael Fascitelli

While buying out the companies that stood in his way, Roth acquired top talent, too. In 1996, he convinced Fascitelli, then a Goldman Sachs hotshot, to come over to Vornado as president with a compensation package of $50 million, unheard of at the time in real estate. Kenneth Patton, a professor at NYU’s Schack Institute of Real Estate and a former REBNY president, said recruiting Fascitelli was Roth’s signal to his investors and the industry that he was serious. 

“With that hire, he was saying: ‘We’re going to be unsentimental. Not good ol’ boys, but young nasty boys who’ll do fucking things the way we gotta do it,’” Patton explained.

Roth and Fascitelli, who the New York Post crowned the “Gangstas of Brick,” matched each other for swagger and chutzpah and went after the biggest assets. In 1997, Vornado acquired Bernard Mendik’s Midtown office portfolio in a $654 million deal, a transaction that the research firm Green Street Advisors said was “among the best M&A deals in REIT history.”

They were also the front-runners to take over the World Trade Center site in 2001, but pulled out of the bid at the eleventh hour, and Larry Silverstein moved in.

In 2007, Blackstone Group had a deal in place to purchase Zell’s Equity Office Properties for about $48.50 a share or $36 billion — at the time the largest-ever leveraged buyout. When Zell solicited rival bids, Roth wrote him a couplet: “Roses are red, violets are blue. I love you Sam, our bid is 52.”

The rhyme set off an intense bidding war between Blackstone and Vornado, in which Blackstone eventually prevailed with a $39 billion offer. It was a career-defining moment for Jonathan Gray, Blackstone’s head of real estate, who said his firm expects to triple its investors’ money in the deal.

“It was like playing basketball in your backyard with your brother,” Gray told TRD of going up against Roth. “You want to win.”

Roth and a Vornado spokesperson declined several requests to comment for this story.

The second coming

Fascitelli’s last few years at the firm yielded mixed results.

The REIT took huge losses on its bets on Toys “R” Us and J.C. Penney, but he was still widely popular and seen as the man to lead Vornado into the next generation. His departure in 2013 was viewed as a major setback, with a Green Street report at the time describing it as a “succession failure.”

Vornado has always played by its own rules. It refused to hold quarterly earnings call until 2012, a notably opaque move for a publicly traded company, and even when announcing major deals, it rarely provides commentary. 

But Roth was forced to address Fascitelli’s exit. In a May 2013 earnings call, he assured investors that the REIT was working on a succession plan. 

“I’m 71.5 and it’s not appropriate for me to be the head of this company for another 10 years. It’s just not appropriate,” he said.

But he has barely addressed the issue since then — at least publicly.

Goldfarb compared it to the Coca-Cola recipe, calling Roth’s next successor the “greatest mystery in the history of the world.”

LeFrak, who’s 71, said Roth would figure it out when the time was right.

“If Steve felt for one minute that he couldn’t be really effective, he would do something about it,” he said.

Even if Roth has failed to ease investor concerns about his successor, he has managed to reinvent the company he founded. Since Fascitelli left Vornado, the REIT disposed of several office properties, including 1740 Broadway, 866 UN Plaza and 20 Broad Street. It also exited its stake in J.C. Penney, turned its mall portfolio into a separate REIT, sold off major commercial properties in Los Angeles, and spun off its $6 billion Washington, D.C., portfolio.    

Roth decided to focus on core Manhattan, where 69 percent of Vornado’s portfolio is now located, he said in an April letter to shareholders. In particular, the firm bet big on high-end retail, buying $1.3 billion worth of assets since 2013, according to Real Capital Analytics, including a $700 million deal for the St. Regis retail condo in partnership with Crown Acquisitions. 

Vornado now controls 20 percent of Upper Fifth Avenue’s retail frontage, including flagship stores for Victoria’s Secret, Salvatore Ferragamo, Harry Winston and Massimo Dutti. That stretch has become the world’s priciest shopping location, according to Cushman & Wakefield, with average rents north of $3,500 per square foot. And though street retail represents just 9 percent (2.6 million square feet) of Vornado’s total Manhattan holdings, it generates a third of the New York division’s earnings before interest, taxes and depreciation, Roth said in the April letter.

Many in the industry, including Roth, say Manhattan’s retail market is undergoing a correction, and landlords stubbornly holding out for top-dollar tenants may find themselves exposed.

“We’re not in a hope business, we’re in the realistic business, and I believe rents have gotten to the point where they’re too high,” Roth told investors on an August earnings call.

The REIT, however, is not sitting on much vacant space, and observers say it never lost its head.

“Vornado never overpaid for anything,” said Ron Cohen, a vice chairman of capital markets at JLL. Though landlords might have to accept lower rents for a time, street retail as an asset class remains attractive, he noted.

Forbes pegs Roth’s net worth at $1 billion. His compensation between 2012 and 2015 totaled $35 million, according to Vornado’s public filings. Last year’s figure included $261,724 for a car and driver (sources said driving is one of the few things Roth sucks at).

And with so much money in the bank, the Vornado chief could keep the trains running and leave the big development work for his successor. But several in the know said that’s not his style.

West Side story

Vornado’s “big Kahuna,” Roth said earlier this year, is the repositioning of its Penn Plaza portfolio. Through stealth assemblage plays over the years, the company now controls more than 9 million square feet of office and retail space in the gritty shopping district. Penn Plaza has recently begun to shake off its rusty brand, in part due to the emergence of Midtown South as a tech tenant haven and the rise of Hudson Yards.

The REIT will soon begin renovations of its two major towers next door to Penn Station — One and Two Penn Plaza — both dated office skyscrapers that it plans to completely redesign and connect together, forming a 4.2 million-square-foot mega complex.

Roth recently told investors he hopes to push office rents in his Penn Plaza buildings from the mid-$50s per foot up into the $80s, more on par with new developments two blocks west at Hudson Yards. And much of the redesign, judging by how Vornado executives have described it on an earnings call, seems set on just that: making the buildings look more like their sprightlier Far West Side neighbors.

In March, Danish starchitect Bjarke Ingels released renderings for the new 2 Penn Plaza, a glass-and-steel tower with an undulating canopy at its base inspired by the iconic photograph of Marilyn Monroe posing in a white dress atop a blowing subway grate.

Two Penn Plaza (credit: Bjarke Ingels Group via Yimby)

Sprucing up the Penn Plaza district is something Vornado has been obsessed with for years. More than a decade ago, Vornado and Related were tapped to redevelop the Farley Post Office into a train hall. The partners turned around and proposed something bolder: a $14 billion redevelopment that would have also transplanted Madison Square Garden across the street and replaced it with two skyscrapers, one taller than the Empire State building, and ten million square feet of office space. Then, in 2008, Gov. Eliot Spitzer resigned from office in the wake of his prostitution scandal, and plans for the new station and stadium were shelved.

“It just broke our hearts,” Roth said at a Columbia University talk in 2010. “Every time you go into Penn Station you should be a little bitter. Spit on the floor.”

By early 2016, Gov. Andrew Cuomo had pushed Vornado and Related out of the project altogether. But this September, Cuomo brought them back in the fold for a scaled-down version of the plan. In collaboration with the construction firm Skanska, the two developers will transform the Beaux Arts-style Farley Post Office into a train hall for the Long Island Rail Road, adding hundreds of thousands of square feet of commercial space along the way. The partners are expected to invest $600 million in the $1.6 billion project, which is slated for completion by 2020.

“We’re at the size now where [Roth] doesn’t need me and I don’t need him,” Related’s Ross told TRD in October. “But when we do something we do it because it works for both of us. And the fact is, we trust each other and we don’t let ego stand in the way of doing something, because certainly we both have the size and scale to do anything.”

A modernized Penn Station would be a boon to Vornado’s Penn Plaza bets. But observers question whether it could ever compete for top-tier tenants with Hudson Yards, which has signed the likes of L’Oreal, SAP, KKR and Time Warner.

“New product will always trade for a premium over existing product,” said JLL’s Rob Martin, who helped broker the Foot Locker flagship’s move to Vornado’s 330 West 34th Street. “But given the location, if [Roth] is able to modernize the buildings, he’ll be able to get a premium. Will it be on par with new construction? The market will tell.”

“15 CPW on steroids”

At the Bloomberg event last spring, Roth spoke candidly about why residential development isn’t his thing. He gestured upstairs to the One Beacon Court condos that Vornado developed above Bloomberg’s headquarters in 2005.

“I sold an apartment to a famous person for $24 million in this building a dozen years ago,” he said, alluding to SAC Capital’s Steve Cohen. “He has it on the market now for $85 million. I hate that!”

After completing One Beacon, Roth avoided residential condo construction for years. But 220 CPS — a site the REIT had entered as a lender — was an opportunity too lucrative to pass on. Vornado took control of the site after the owner got mired in financial troubles, and then kept assembling parcels for the luxury condo tower.

But to make it happen, Roth had to go up against Barnett’s Extell Development, which controlled a garage right under a key piece of land. It took two years before Barnett agreed to give up his lease, at which time he also sold Vornado a neighboring lot at 225 West 58th Street, plus additional air rights, for a total of $194 million.

“It was a big game of real estate chess, in which both sides had something that the other wanted — and a lot of value was at stake,” a source close to Vornado said on the condition of anonymity.

With full control of his coveted site and his low basis in the land, Roth decided to go all-out and develop a building that would be, in his words, “at the tippy top of the luxury market.”

In September 2015, the REIT upped its financing from the Bank of China on 220 CPS from $600 million to $950 million. The following month, Roth said Vornado was spending an extraordinary $3,500 per square foot on hard, soft and financial costs to develop the Robert A.M. Stern-designed tower.

There’s a special affection developers feel for their glitziest condo towers. Harry Macklowe is said to obsess over every small detail of 432 Park Avenue, the skinny supertall he regards as “the culmination” of his career. Arthur Zeckendorf will talk about 520 Park Avenue as though he were describing his favorite son. Roth, sources said, goes even further.

“He’s building this building as if he were going to live in every single apartment,” said Corcoran Group CEO Pam Liebman, whose new development arm, Corcoran Sunshine, is handling sales at the project.

Louise Sunshine, who was involved in pre-development and is consulting on the project until the end of this year, said Roth is “absolutely involved in every strategic decision.”

“He’s equally good at coping with numbers as he is sitting down with renderings and designing a living room,” she added.

Even Barnett had praise for his rival, saying 220 CPS’ success proves that despite the perception that the luxury condo market is doomed, the right product can still command big bucks. Roth’s project is “15 Central Park West on steroids,” Barnett told TRD in a recent interview.

The project has a total projected sellout of $3.17 billion for its 87 units, and last November, Vornado announced it had sold $1.1 billion worth of units in just six weeks. Roth has since refused to update the REIT’s shareholders on sales, saying the outsized media attention on the project could be damaging.

Personal politics

In 2011, Roth and his wife, Daryl, a veteran Broadway producer, donated money to three Republican state senators who were supporting same-sex marriage in New York.

“My son is gay and happily planning to marry soon,” Daryl told the New York Times in January 2012. That September, their son, Jordan, walked down the aisle with his longtime boyfriend, Richie Jackson.

A tuxedo-clad Roth gave a memorable toast at the wedding, held at the Al Hirschfeld Theatre on West 45th Street. He told Jordan: “You are complicated and can be difficult, but all the great ones are. My son, I want you to know, you are perfect in Mom and Dad’s eyes.”

The party then moved to Roseland, and included such guests as Barbara Walters, CBS’ Leslie Moonves, Goldman Sachs’ Blankfein and Tyra Banks. Also in attendance: Donald Trump.

Trump and Roth are partners on a skyscraper at 1290 Sixth Avenue, and have been good friends for years. Both men, sources said, are vicious negotiators and share an extreme arrogance.

But Roth’s support of Trump’s presidential run, a campaign in which he has proposed overturning same-sex marriage, took many by surprise.

Trump even gave Roth a special shout-out in his New York primary victory speech, calling the Vornado chief “my man.” And in August, the Trump campaign announced that Roth would be part of its economic advisory committee, a cadre that includes LeFrak, Vector Group’s Howard Lorber, and Colony Capital’s Tom Barrack.

Donald Trump

While few in the real estate industry reacted out loud, an executive at a rival developer said, “it was very hard to take [Roth] seriously on this Trump thing.”

It was left to playwright and gay rights activist Larry Kramer to call Roth out.

“I don’t know why but I was incredibly shocked and disappointed when it was announced that you had become one of Donald Trump’s billionaire brain trust,” Kramer wrote in an open letter to Roth on Facebook. “I could not believe that you could support a candidate, a vice-president, and a party that threatens many of the things that you hold most dear.”

For his part, Roth seems to have distanced himself from the Trump campaign. Federal election filings show he gave no money to the Republican candidate since Trump announced his bid last year, in contrast to Roth’s previous donations to Barack Obama, John McCain, Mitt Romney, and Hillary Clinton, among other politicians.

When asked about his role in Trump’s campaign in September, Roth was in no mood to talk about it. “I have nothing to say about the campaign, and I don’t spend any time on it,” he said at a conference hosted by Bank of America Merrill Lynch.

After the Tornado

Although Roth often seems like a permanent fixture at the company, observers said they see several veteran Vornado executives as contenders for the CEO role.

David Greenbaum, who runs the REIT’s New York division and has been with Vornado since 1997, is one, though several in the know said his personality could not be more different than Roth’s.

“He’s a phenomenal, brilliant guy,” said JLL’s Cohen of Greenbaum. But he’s “one of those mechanics that doesn’t come out of the garage.”

Roth, in contrast, is all rakish charm — an effusive, affectionate type who inspires tremendous loyalty. Corcoran’s Liebman recalled being on the driving range at the Miami golf club La Gorce right next to Goldman Sachs’ Lloyd Blankfein. Up strutted Roth, who bellowed: “Who do I say hello to, the money or the beauty? I’m gonna go with Pam!”

One other potential successor being discussed, according to sources, is Michael Franco, Vornado’s chief investment officer. Franco joined the REIT in 2010 from Morgan Stanley, where he was co-head of acquisitions and capital markets.

Roth could also opt to go outside the firm for his pick, sources said, though no clear outside contender has emerged.

Analysts said it was likely Roth has a plan in place, but doesn’t see the need to disclose it yet.

Sandler O’ Neill’s Goldfarb pointed to Boston Properties, whose appointment of Thomas came as a surprise. Many investors and analysts, he said, were expecting the firm to name Douglas Linde its president.

Blackstone’s Gray, who is 46 and considered one of the front-runners to become the firm’s next CEO once 69-year-old Stephen Schwarzman retires, said he expects Roth to make a smooth transition.

“Betting against Steve Roth,” Gray said, “is not a good way to go.”