The Real Deal - New York Real Estate News

The Cats’ meow? Red Apple Group CEO buys radio station

Posted: 28 Jun 2019 04:30 PM PDT

The Greek-American magnate reportedly doesn’t have any immediate plans to change the station.

John Catsimatidis, the billionaire host of AM-970 radio show “The Cats Roundtable,” has acquired 77 WABC radio for $12.5 million.

The station was purchased by Red Apple Media, a subsidiary of Castimatidis’ Red Apple Group, from Atlanta-based Cumulus Media, the New York Post reported.

“I grew up with WABC,” Catsimatidis told the newspaper. “It’s an iconic channel. We want to bring it back to being a great station.”

He did not indicate any immediate plans for change at the station, which is one of the city’s oldest.

Catsimatidis, a politically-connected mogul who made headlines in mid-June for reportedly rejecting Democratic presidential candidate Joe Biden’s request to contribute to his campaign, added that he hopes to buy more radio stations in the future.

“I started a radio show five years ago, which is now available in 14 states and on the internet,” he said. “It has gained a large and loyal audience.”

Catsimatidis, tapped by New York Gov. Andrew Cuomo to lead a fundraising campaign to rebuild a Greek Orthodox church at Ground Zero (he was born on the Greek island of Nisyros), becomes the latest in a series of local real estate tycoons to snap up media assets.

In December, developer Charles Cohen struck a deal to acquire the Landmark Theatres chain for an undisclosed sum, and current White House senior adviser Jared Kushner famously paid $10 million to buy to buy the New York Observer in 2006. (The Real Deal reported in January on the side hustles of some prominent industry players.)

Catsimatidis, who in 2015 made an unsuccessful play to buy the New York Daily News, has said he intends to use his media voice and contacts to help Biden, downplaying the brief discussion he had with the former vice president at a fundraising event earlier this month.

“I think Joe Biden is the most common sense nominee of the 23 people running in the Democratic Party,” he recently told CNBC. “Monetarily, I did not commit to helping him, but I will help him brotherly, on my radio show and with all my media contacts.” [New York Post] — Sylvia Varnham O’Regan

Nightingale’s $900M deal for the Coca-Cola building fizzles

Posted: 28 Jun 2019 04:07 PM PDT

711 5th Avenue (Credit: 42 Floors)

It appears as though Nightingale Properties’ deal to buy the Coca-Cola building on Fifth Avenue has gone flat.

Nightingale filed a lawsuit Friday in Manhattan State Supreme Court alleging Coca-Cola is in breach of the sales agreement the two parties struck in May to sell the building at 711 Fifth Avenue.

Details of the allegations are scant, but Nightingale claims Coca-Cola failed to disclose a letter from 2017 between the soft drink giant and Swatch, the parent company of Swiss luxury watchmaker Breguet.

Breguet leases one of the pricey retail spaces at the base of the building, and part of Nightingale’s plan to purchase the property hinges on negotiating a deal to have Breguet buy out the remaining term on its lease, as The Real Deal previously reported.

Representatives for Nightingale could not be immediately reached for comment, and a spokesperson for Coca-Cola declined to comment.

Nightingale says in its complaint that it is ready and willing to close on the deal.

But there’s been much speculation about whether Nightingale can line up the funds to close the purchase. And when a deal goes sideways, buyers will sometimes claim the owner failed to disclose some arcane piece of information about a property in order to twist an arm in negotiations.

Nightingale has teamed up with Ashkenazy Acquisition Corp. and Wafra (a subsidiary of a Kuwaiti sovereign wealth fund) to try to buy the building for north of $900 million.

Cushman & Wakfield’s Doug Harmon and Adam Spies are marketing the property on behalf of Coca-Cola. They could not immediately be reached for comment.

Office rents in U.S. are going up — barely

Posted: 28 Jun 2019 02:47 PM PDT

(Credit: iStock)

Office rents across the U.S. are ticking up.

The average asking rent in May for office buildings over 50,000 square feet in size rose 0.4 percent compared to the previous three-month period, coming in at $36.33, according to data firm Yardi Matrix’s recent national report, covered by Connect Commercial Real Estate.

The growth stems from solid demand thanks to a healthy job market. But the slowness of the growth comes from employers’ selectivity about their office space needs. The average national vacancy rate, 13.7 percent, didn’t budge over the same timeframe, according to Yardi.

However, some cities saw much larger spikes in their average asking rents.

In Brooklyn, there was a 10 percent boost in May, which was followed by Houston and San Francisco (3.8 percent) and Orlando (3.1 percent), according to Yardi. Brooklyn also has the highest percentage of its stock under construction — 15.8 percent.

Manhattan saw an average asking rent increase of 0.7 percent. That counters what happened in the borough a year-and-a-half ago, when another report from Colliers International found that average asking rents slid 0.7 percent.

Manhattan also has 20.8 million square feet of space in the pipeline, the most in the country, according to Yardi. Though that looks like a lot, the market likely can absorb it, the report found. In 2018, Manhattan had a record-breaking year for office leasing.

Miami trailed Manhattan, with asking rents in that city rising 0.6 percent. Los Angeles’ figure fell more in line with the national average increase, a bump of just 0.3 percent.

Chicago was one metro where asking rents dipped by 0.3 percent.

One red flag is the 173 million square feet of office product being built across the country. But that construction is confined mostly to cities that need extra or newer office space, according to Yardi. [Connect] — Mary Diduch

Carpenters union rocked by bribery scandal could face international takeover

Posted: 28 Jun 2019 01:33 PM PDT

The leadership shakeup follows the arrest Thursday of Local 926 president Salvatore Tagliaferro (Credit: iStock)

The parent organization of a carpenters’ union whose leader is ensnared in an alleged bribery scandal is swooping in to temporarily take over the local chapter.

The United Brotherhood of Carpenters, the union’s international chapter based in Washington, D.C., has appointed one of the leaders of its regional subsidiaries to oversee Brooklyn-based Local 926. The leadership shakeup follows the arrest Thursday of Local 926 president Salvatore Tagliaferro, who is accused of conspiring with an official from Local 157, John DeFalco, to accept tens of thousands of dollars in bribes in exchange for granting membership into Local 926.

The UBC tapped William Waterkotte, vice president of the Pittsburgh-based Eastern District regional chapter, to supervise Local 926 until a hearing is held to determine whether or not UBC should fully take over the union, according to a letter issued by UBC president Doug McCarron that was made public on Friday.

Waterkotte didn’t return messages seeking comment. An attorney for Tagliaferro, Richard Rosenberg, said his client is a “dedicated union man” and denies all the allegations in the indictment.

In McCarron’s letter, he notes that the UBC needed to take action immediately “for the purpose of correcting corruption or financial malpractice” — one of four reasons that labor organizations impose a trusteeship. A trusteeship would likely mean that the UBC would replace the local’s leadership or potentially merge the local with another.

Back in 1995, the UBC placed the New York City District Council of Carpenters into trusteeship due to corruption issues that persisted after the union reached a deal with the federal government to install court-appointed supervision. The trusteeship lasted through 1999, but the District Council still has a court-appointed monitor. His term expires July 17 but will likely be renewed.

Since 1990, several of the District Council’s locals have merged or disbanded, dropping from a total of 22 chapters to nine. Locals 926 and 157 are two of nine local unions that currently make up the District Council. Local 157 was expanded in 2010 when the District Council decided to disband Local 608, amid racketeering convictions and the firing of five presidents, the New York Daily News reported at the time. McCarron’s letter doesn’t indicate any leadership changes at Local 157 following DeFalco’s arrest.

The District Council also recently experienced its own change in leadership. In February 2018, president Steve McInnis stepped down due to accusations of misconduct, which unrelated lawsuits against the union have alleged are tied to sexual harassment. Earlier this month, his replacement, Graham McHugh, stepped down, citing “mistakes” he made prior to becoming a leader at the District Council.

As the city’s construction unions have grappled with the rise of nonunion competitors, the District Council has been viewed as one of the first unions to work closely with developers to reach compromises on costs. For example, the union inked a deal with Related Companies for work at Hudson Yards long before the Building and Construction Trades Council was able to find common ground with the developer.

This Hamptons luxury broker just sold his own mansion for 8 figures

Posted: 28 Jun 2019 09:45 AM PDT

Lisa and Michael Schultz; 1438 Ocean Boulevard in Palm Beach (Credit: Getty Images/Realtor.com)

Earlier this week, East Hampton-based Corcoran Group agent Michael Schultz and his wife, Lisa, made headlines with the $11.5 million sale of their Palm Beach estate, a 6,328-square-foot home the couple bought in 2005 for less than half its sales price.

A former Urban Outfitters executive who transitioned to a real estate career as a quasi-hobby after reading the property section of the East Hampton Star, Schultz has become a seasoned luxury broker. His most expensive current listing is a $35 million mansion in Bridgehampton that belongs to the family of former President John F. Kennedy, and Schultz himself has bought and sold properties in luxury markets across the country.

Schultz declined to discuss the recent sale of his former nine-bedroom, eight-bathroom home in pricey Palm Beach, where he has owned multiple homes, but he did note it was an off-market deal that he did not have the listing on. He would not reveal the broker.

The Real Deal caught up with Schultz, who has buying experience in other luxury markets, like Telluride, Colorado, to chat about slumping high-end home sales on Long Island’s affluent East End.

What’s the state of the Hamptons market right now?
Consumers are aware that the market is soft, but it’s softer in certain areas, moreso than others. People read in the newspapers that the Hamptons aren’t doing well, but it’s talked about in a blanketed way and it’s not necessarily specified where. In particular, the premium market is what’s doing poorly. But it’s actually good for us — when the market is at a low, it brings buyers back out here.

How do the Hamptons compare to other U.S. luxury markets?
Our taxes are lower. In the Hamptons, you could be living in a $9 million, $10 million house, but have taxes that are maybe $20,000 to $25,000. That’s nothing compared to the suburbs of New York City. I know someone who just sold his mother’s house in Scarsdale and is paying $100,000 for a house that sold for $2.4 million. In Florida, residents don’t pay any state tax.

Do you think East End residential will rebound?
I do believe in the Hamptons market. I believe people love being here. We have the ocean, good food and fun activities — and there’s a real natural beauty here. There are a lot of reasons to be out here.

What kind of advice do you have for young brokers trying to break into the business?
It’s much harder work than people think. I think it’s become sort of a glamorous job, even though when you’re doing it it doesn’t seem so glamorous. It’s hard to break into, but people have done it by being a young disruptor. It’s a lot of hard work, but it’s also a lot of skills — it’s about how you present yourself and how you market your properties.

All interviews have been condensed and edited for style and clarity.

Gurals, Sorgente planning $80M upgrade for the Flatiron Building

Posted: 28 Jun 2019 08:50 AM PDT

GFP Real Estate principal Jane Gural-Senders and the Flatiron Building at 175 5th Avenue (Credit: Pixabay)

The Flatiron Building is getting a facelift as it seeks a new anchor tenant.

Owners GFP Real Estate and the Sorgente Group are planning to spend between $60 million and $80 million to upgrade the 117-year old landmark, the New York Times reported.

Work crews will arrive soon to install central air conditioning and heating systems, a new sprinkler system, a second staircase, an upgraded elevator system and a renovated lobby. They’ll also tear out dropped ceilings and sheet rock partitions as the building seeks to lure a single tenant to replace Macmillan Publishers, which moved into the Equitable Building earlier in June.

CBRE’s Mary Ann Tighe is marketing the property.

The work will likely take about a year to complete.

Tighe hopes to be able to start showing some of the floors to potential tenants by Labor Day, and the owners of the building say they have already gotten some offers from co-working firms and that a major tech company has toured the building as well.

Knotel was reportedly close to a deal to lease the building early in 2019, but this never came to fruition.

The neighborhood has become popular for tech companies in recent years, and rents in the area go for an average of more than $80 per square foot. However, the owners are more interested in finding the right tenant for the building than they are in finding the tenant who can pay them the most money.

“People want it, but who’s going to be the best?” GFP Real Estate executive director Jane Gural-Senders told the Times. “You want something that’s going to bring greatness.” [NYT] – Eddie Small

Jersey City mayor’s ally is subject of grand jury inquiry into tax evasion

Posted: 28 Jun 2019 07:45 AM PDT

Jersey City Mayor Steve Fulop (Credit: Getty Images)

The arrival of Steve Fulop was a welcome sign to New Jersey developers and construction companies.

The Jersey City mayor has overseen the reinvention of the city’s once dilapidated business district, which has given way to skyscrapers.

But as the city has risen, an associate of the mayor responsible for expediting building and construction permits is now at the center of a federal tax evasion investigation, Bloomberg reports.

Tom Bertoli could now face criminal charges as part of a grand jury inquiry after prosecutors learned he had not filed tax returns on payments exceeding millions of dollars over the past decade. Bertoli is known as a conduit between many developers and Fulop, and has helped expedite building permits.

As part of the probe, multiple potential conflicts of interest for Fulop have arisen, including campaign donations, personal home loans for a planned beach house in Narragansett, Rhode Island, and tax assessments.

“The mayor’s only consideration is what is best for Jersey City’s residents and taxpayers based on market and economic conditions,” a spokesperson for Fulop’s office said in a statement to Bloomberg.

One developer that has worked with Bertoli is the Charles Kushner-led Kushner Companies, which used him for its Trump Bay Street project. The New York-based company also gave tens of thousands of dollars to Fulop’s exploratory campaign for governor as it sought permits for another development, the outlet reported.

But Fulop’s office last year denied tax abatements sought by Kushner’s firm, leading to a falling out between the two.

Other developers who have hired Bertoli and donated to Fulop’s campaigns include Mack-Cali Realty, Ironstate Development and Dixon Advisory Services. [Bloomberg] — David Jeans

Oceanfront Amagansett new build lists at $33M, Paul Manafort’s Bridgehampton estate awaits fate & more news from the Hamptons

Posted: 28 Jun 2019 07:00 AM PDT

Clockwise from top left: Paul Manafort Jr.’s Bridgehampton home awaits a potential sale after being seized by the government, a Cutchogue farm and vineyard has its price hacked down to $16M, an oceanfront new build in Amagansett lists for $33M and another waterfront compound in Southampton with two golf greens and various other amenities is now the priciest available home on the East End.

Feds hold off on listing Paul Manafort’s Bridgehampton home
Those who lived in Bridgehampton next to Paul Manafort Jr., the onetime campaign manager for President Donald Trump, recently told the New Yorker that he made for a lousy neighbor. Manafort, who pleaded guilty in September 2018 to charges of conspiracy and financial fraud as part of a deal with former special counsel Robert Mueller III, somehow managed to build “his house three and a half feet taller than what the zoning allowed,” ruining views for his neighbor, Lewis Berman. Manafort also failed to secure his garbage, which led to Berman’s dog getting sick, he told the outlet. As part of Manafort’s plea agreement, the federal government seized five of his properties, including the home he owns at 174 Jobs Lane. The Real Deal reported this month on the government listing Manafort’s Trump Tower condo at $3.6 million and his Soho condo at $3.6 million. Federal officials have offered both up for sale. Berman told the New Yorker that the U.S. Marshals Service, which recently sought to sell East Hampton’s Arc House, is still waiting for permission from the U.S. Department of Justice to list the property. In the meantime, they’ve let the grass grow nearly a foot tall. The Justice Department did recently intervene to spare Manafort from a summer at Rikers Island. On Thursday, he pleaded not guilty to state fraud charges filed in New York. As for his mansion, which has 10 bedrooms, six bathrooms and a pool, it could fetch up to $10 million. [The New Yorker]

Comedian’s former Southampton condo sells for $929K
Actress and comedian Kate McKinnon might not be coming back to “Saturday Night Live,” and now she’s definitely not returning to a Southampton condo she used while filming “Rough Night” with Scarlett Johansson, according to the New York Post. A three-bedroom, three-bathroom unit at 10 Leland Lane that McKinnon rented when making the 2017 comedy, which filmed at a home in Southampton’s North Sea neighborhood, has now sold for $929,000, the outlet reported. The 1,600-square-foot condo has a large living room, master suite with high ceilings and a guest suite, as well as access to the tennis courts and pool of the Canterbury Mews Association. Aaron Curti and Brenda Giufurta of Douglas Elliman had the listing for the unit, which is also listed as a summer rental costing $35,000 from July through Labor Day, or $20,000 starting in August. And while the cost of the unit may seem relatively cheap compared to more pricier Hamptons homes, this week Newsday had a rundown on three co-ops and condos that can be had for less than $400,000 on the East End. [NYP] — Brian Baxter

Media mogul’s former Southampton home now East End’s priciest
After a $30 million price cut last month on Southampton’s Jule Pond, once the most expensive estate on the South Fork, and with another hot Hamptons summer having officially begun, what better time than now to list the priciest properties on the East End? Behind the Hedges took up the task. The outlet noted that a three-property compound at 1080 Meadow Lane in Southampton, listed for the past two years at $150 million, is now No. 1 in the region’s richest sales index. Once owned by media mogul Robert F.X. Sillerman, the waterfront estate has 12 bedrooms, 12 bathrooms, an indoor pool, an outdoor pool, a pool house, a tennis court, tennis house, two golf greens and a golf house, Curbed previously reported. Sillerman sold the estate in 2016 for $38 million, a price he has also received for at least two other Meadow Lane properties he owned. Harald and Bruce Grant of Sotheby’s International Realty currently have the listing for 1080 Meadow Lane. Southampton is home to six of the 10 priciest listings on Behind the Hedges’ list. Coming in at No. 10 on the ranking is 317 Murray Place in Southampton, which is asking $45 million. The listing is held by Bespoke Real Estate, the No. 1 firm on The Real Deal‘s recent ranking of top Hamptons brokerages. [Behind the Hedges]

Oceanfront Amagansett new build lists at $33M
A 5,2000-square-foot new construction home has hit the market in Amagansett for $33 million, according to Hamptons Real Estate Showcase. The oceanfront abode has six bedrooms, seven bathrooms, floor-to-ceiling glass walls in its living room, an open-concept floor plan, a roof deck and a fitness facility. The one-acre property also holds a pool, jacuzzi, outdoor terraces and a private boardwalk to the beach. The home at 261 Marine Boulevard was built by East Hampton-based Consiglio Builders and designed by Barnes Coy Architects, a New York-based firm that in 2018 won a Top 50 Coastal Architects award from Ocean Home Magazine. The New York Times reported in May on Barnes Coy being behind a number of homes that have helped bring about the return of the modernist style for high-end Hamptons homes. Noel Roberts of Nest Seekers International has the listing. [HRES]

Cutchogue farm, vineyard has price hacked down to $16M
A North Fork property spread across 147.5 acres that holds a vineyard and a farm has had its price cut by $3.5 million, Behind the Hedges reported. Now on the market at $16 million, the sweeping property at 4455 Oregon Road in Cutchogue contains a 2,200-square-foot home set atop a bluff overlooking the Long Island Sound, according to the New York Post. The home, built in 1982, also has a large master suite, a fireplace, a pool and 1,390 feet of beachfront. The property’s 26-acre vineyard grows six types of grapes, including Chardonnay, Merlot and Pinot Noir. “It’s extremely rare. It has nearly 1,400 feet of waterfront, the largest in the North Fork,” listing agent Marianne Collins of Brown Harris Stevens told the Post last year. “Interest in this type of estate has really grown in the last year or so.” The Real Deal reported in May on the North Fork’s hot property market. In April, late movie mogul Michael Lynne’s Bedell Cellars in Cutchogue listed at nearly $17.9 million. And earlier this month, Newsday reported on another 17.5-acre Cutchogue farm hitting the market at $3.5 million. [Behind the Hedges]

Southampton lawyers’ get pay bump in development litigation
Southampton Town’s Board voted to increase the amount it would pay to the law firm representing it in a lawsuit over a contested plan for an East Quogue golf development, once called the Hills, according to Newsday. The board will now pay $50,000 to Islandia-based Margolin Besunder, about $35,000 more than what it initially approved in January. The pay increase was approved in a 5-0 vote. Southampton’s Zoning Board of Appeals voted in November that an 18-hole golf course planned for the site could be deemed an accessory use to a residential subdivision, helping smooth its approval current zoning laws. That decision propelled forward a proposal by Arizona-based Discovery Land Company — a firm founded by George Clooney pal Mike Meldman — for a housing development with a golf course known as the Hills. The town’s planning board is still reviewing the application. Meanwhile, environmentalists filed a lawsuit in December to try to overturn the zoning board’s decision. On June 27, the town’s planning board is reportedly expected to determine whether a supplemental environmental review is needed for Discovery Land’s latest version of its development plan. [Newsday]

Forever 21 is in trouble. So some executives asked its landlords to pitch in, report says

Posted: 28 Jun 2019 06:30 AM PDT

From left: Simon Property Group David Simon, Forever 21 CEO Do Won Chang, and Brookfield CEO Bruce Flatt (Credit: Getty Images)

Forever 21 is another major retailer attempting to fend off the woes of the retail industry. But its executives remain split on how to chart a path forward.

While billionaire co-founder Do Won Chang wants to keep the company’s ownership intact, some breakaway executives have approached the retailer’s landlords, including Brookfield Asset Management and Simon Property Group, for investment in the company, Bloomberg reported.

The move is part of ongoing talks of a debt-restructuring at the company, as other retailers have been impacted by the rise of online sellers. It has caused a rift among the company’s leadership, with some executives standing by Chang, and his desire to hold onto ownership, and others who reportedly approached the landlords.

However, Forever 21 disputed Bloomberg’s reporting, and said that while it had discussed rent terms with its landlords, it had not raised the possibility of an investment stake.

“While Forever 21’s policy is not to comment on speculations, we feel it’s important to refute these rumors, which are categorically incorrect,” the company said in a statement to the outlet.

The retailer, which opened its first store in Los Angeles in 1984, now has more than 800 locations in the United States, Europe, Asia and Latin America. It reportedly makes up for 2 percent of Brookfield’s annual minimum l rent revenue. That figure is at 1.4 percent for Simon Property Group. [Bloomberg] — David Jeans

Two 432 Park Ave. pads sell for $61M

Posted: 28 Jun 2019 06:00 AM PDT

432 Park Avenue

Not a bad day for Macklowe Properties and CIM Group.

Two luxury condominiums at the developers’ 432 Park Avenue sold for $61 million combined, according to property records filed Thursday with the city’s finance department. And it looks like there’s just one more sponsor unit up for grabs.

A living trust for Roy T. Eddleman snapped up the last penthouse — #94 — in the 96-story building for $31.5 million, a cut from the $41 million it had been asking. Eddleman appears to have been CEO and chairman of Spectrum Inc., a life sciences company that was acquired in 2017 by Repligen Corporation.

The three-bedroom home measures 3,952 square feet, pricing the deal at roughly $7,971 per square foot.

Meanwhile, an 86th-floor unit went to philanthropists Roger and Susan Hertog, who shelled out over $29.5 million, or about $7,334 per square foot. Roger Hertog co-founded investment firm Sanford C. Bernstein & Co., which merged with Alliance Capital Management in 2000 and later became AllianceBernstein. Hertog retired in 2006 but remains vice-chairman emeritus.

The three-bedroom, 4,028-square-foot condo was on the market with an asking price of $39.5 million.

Through a spokesperson, the developers declined to comment on the sales. Douglas Elliman, who is handling sales at the building, didn’t immediately return a request for comment.

The remaining sponsor unit on the market is the 34th floor. The 8,088-square-foot home is being marketed as a “white box,” or an opportunity for a buyer to come in and design whatever she wants. It’s asking $28 million, or about $3,462 per square foot. A handful of the remaining sponsor units are in contract but have yet to close, according to the developer’s spokesperson, Joey Arak.

The deals come soon after Jennifer Lopez and Alex Rodriguez recently parted with their apartment at the tallest residential building in the Western Hemisphere, selling it to an anonymous buyer for $15.75 million.

Sales launched at the development in 2013.

“Agents are tenants too,” claim brokers blasting bills to reduce rent costs

Posted: 28 Jun 2019 05:35 AM PDT

Brokers hold signs that read, “Don’t cap my income” and “Agents are tenants too.”

Hundreds of real estate professionals converged Thursday on City Hall for a public hearing about bills aimed at reducing rent costs by capping broker fees.

In the baking sun, holding signs that said, “Don’t cap my income,” and “Agents are tenants too,” brokers waited for hours to be let on to the City Council grounds, where the Real Estate Board of New York organized a protest prior to the hearing. Due to overfill, many were forced to wait behind gates and could not take part.

The strong turnout spoke to the anger and frustration many brokers feel about the proposals, which they fear could dramatically cut their income. The City Council’s push follows landmark rent reforms passed in Albany earlier this month, and comes as debate about housing plays out at the federal level in the leadup to the 2020 election.

If passed, the City Council’s new measures would limit broker fees to one month’s rent in cases where the broker was hired by the landlord, an amendment made a month ago after three City Council members withdrew their support for a bill that would have capped all rental brokers’ commissions to one month’s rent.

Brokers hold various signs opposing Intro 1423

Standing on the street outside the City Hall grounds, John Lawerence, executive manager of sales at Douglas Elliman, said he had closed three offices he managed to come to the rally.

“I’m a salaried employee, so I’m not affected by this,” he said. “[But] I have 400 agents that work for me… they are very affected by this. Many are living on a month-to-month situation, paycheck to paycheck.”

Heather McDonough Domi, co-chair of the New York Residential Agent Continuum, also waited outside as members of her group handed out custom blue T-shirts and chatted before the rally. She said they had come to show support because the proposed measures would cut broker commissions by 40 percent, and she said renters would feel the consequences.

“The owners are going to have to make up that 40 percent and the way they’re going to make up that 40 percent is by increasing the rent,” said Domi, an agent at Compass.

Advocates of the bills believe changes are necessary to protect renters from steep upfront rental costs that prevent tenants from being able to move and discriminate against low-income and elderly renters.

“Some of the big things that keep people from moving are unreasonable brokers fees and security deposits,” said Andrea Shapiro, program manager at the Metropolitan Council on Housing, who attended the rally and previously met with City Council member Keith Powers, chief sponsor of the bill known as Intro 1423.

In addition to concerns about losing income, many brokers claimed their industry was being unfairly targeted by what amounted to government overreach. They argued that renters have the option to not use brokers at all, or, if so, to negotiate their fees.

“People that can’t afford the service, don’t ask for the service,” said Natasha Fontaine of Citi Habitats.

For activists like Shapiro, such arguments are not so simple. She said that renters are often told they would not have to pay a fee, only to find out later that they do.

“Sometimes it says there’s a broker fee in the advertisement, sometimes it doesn’t,” Shapiro said. “Sometimes it says there’s no fee and then it turns out there is a broker.”

Those who flocked to Thursday’s rally varied widely in age. Aldo Fleurantin, a broker with Bond New York, said he had been in the business for three years and estimated he would lose at least a third of his income if the measures passed.

“I would definitely want to reconsider what I’m doing in real estate, because I still have to pay my bills,” said Fleurantin, adding that he is a renter himself.

Inside the hearing, emotions ran high as a series of speakers appeared before Robert Cornegy, chair of the Committee on Housing and Buildings, and other City Council members to voice both support and opposition for the bills.

On multiple occasions, staffers were forced to tell those seated in the public gallery to quiet themselves after applause and yelling erupted across the room.

To get around such rules, audience members took to raising their palms in the air and wiggling their fingers when panelists said things they agreed with. They turned their thumbs down when panelists spoke in favor of the bills.

Ultimately, both sides put forward a human pitch — to protect renters and brokers.

“Please keep in mind that the vast majority of rental agents make less than $50,000 per year — and are tenants themselves,” Citi Habitats president Gary Malin said at the hearing. “These are not the brokers selling multimillion-dollar penthouses on cable TV. These are hard-working, middle-class people, many with families.”

It remains unclear when the City Council will vote on Intro 1423.

HAP Investments pitching East Harlem rental portfolio as $130M upside play

Posted: 28 Jun 2019 05:00 AM PDT

Clockwise from left: 329 Pleasant Avenue, 419 East 117th Street, 2338 Second Avenue and 2211 Third Avenue with HAP CEO Eran Polack

With the new rent regulations having taking effect, Eran Polack sees an opportunity to sell a mostly market-rate portfolio at a premium.

His company, HAP Investments, is looking to sell four multifamily rental buildings in East Harlem for a combined price of just over $130 million. HAP began assembling the portfolio in late 2010.

Together, the properties at 329 Pleasant Avenue, 419 East 117th Street, 2338 Second Avenue and 2211 Third Avenue contain 171 newly-constructed units, most of which are free-market, according to listing broker James Nelson of Avison Young. Two of the buildings hold affordable units and a third, the 30-unit building at 2338 Second Avenue, will be eligible to receive the 421a tax abatement once construction is completed.

“I think you’re going to have investors who may now shy away from fully regulated buildings and look for assets like these,” Nelson said. “I think the value of this just went up.”

At a $130 million price tag, Polack is seeking nearly $765,000 per unit — or about $730 per square foot.

“I think there is money out there,” Polack said. “But they just don’t know what to buy because of the changes in [rent] regulation.”

He described the decision to sell the portfolio now as a “good opportunity,” noting that HAP prefers to develop and sell off completed assets.

He noted that 2338 Second Avenue is being sold before construction is finished because it is in an Opportunity Zone so investors using the program can deploy capital to qualify for the tax incentives.

The largest property in the portfolio, the 108-unit 2211 Third Avenue, just received a $55 million refinancing. It was listed at $88 million. Meanwhile, the Karim Rashid-designed 329 Pleasant Avenue was priced at $16 million, 2338 Second Avenue at $22 million and 419 East 117th Street at $4.5 million, according to marketing materials.

Polack is looking to sell the portfolio during arguably the slowest period of the current cycle. According to Ariel Property Advisors, the multifamily market hasn’t been this tepid since 2010.

The Closing: Jay Sugarman

Posted: 28 Jun 2019 04:30 AM PDT

Jay Sugarman (Photo by Emily Assiran)

Jay Sugarman, chairman and CEO of the real estate investment trust iStar, hates being called a developer. The Princeton graduate much prefers “creator” or “innovator,” though “financier” or “ground-lease evangelist” might be more accurate. Sugarman’s firm, which he founded as a part of Starwood Capital Group in 1993 before taking it public five years later, has closed more than $40 billion in debt and net leasing deals. And in 2017, iStar launched Safehold — the first public company to focus exclusively on ground leases. That marks a significant shift in Sugarman’s business strategy. This past February, iStar announced plans to sell off nearly $500 million in assets over the next two years to help grow its ground-lease business. At the same time, Sugarman and his associates are tasked with transforming a 1.25-mile stretch of Asbury Park as the master developer for the city’s waterfront. Under the $1 billion-plus redevelopment plan, they plan to add more than 2,000 homes and 300 hotel rooms to the New Jersey beach town over the next decade. Sugarman and his wife, designer Kelly Behun, live in Hell’s Kitchen with their two sons. The couple also own a home they recently had built in Southampton.

DOB: April 12, 1962
Lives in: Manhattan
Hometown: Houston
Family: Married with two sons (ages 16 and 19)

Where did you grow up? I was born in Houston. [My family] moved to London when I was eight, and we moved to Pittsburgh when I was 11. I went to nine schools in 10 years.

What did your parents do? My father was with an oil company, Gulf Oil, so we moved around. But when I found New York as a freshman in college, I knew I was a New Yorker. I’ve been a New Yorker ever since.

What was it like moving from school to school? That was interesting. You’re a new kid, so you always had to figure out how to get inside. These people have all been together their entire lives; how do I connect with that really quickly? So you become incredibly observant. You watch first and try to figure out, where’s the power? Where’s the code? How do I crack this? How do I get in with the people I want to be friends with? And you’ll always be a little bit of an outsider. You’ll never be part of the history. So you have to be a little quirky, you have to be a little different, so people go, “That’s interesting.”

In what way? When I lived in London, I was a big “Monty Python” fan, so I had that kind of British sense of humor. [I] don’t drink, don’t smoke, don’t swear, don’t do any of that, so immediately you’re an outsider. But that also gives you a chance to observe people and see what makes them tick and be friends with them in maybe a different way. That’s kind of what we do here: Normally people do it this way, but what if you turned it this way? I think that’s what drives me.

Is there anything else that set you apart at the time? I have one of the world’s largest romance comic book collections, because the art of the 1960s is fantastic and nobody really paid any attention to it. And it comes in a format where you can buy it for 10 cents. “Girls’ Love Stories” “Girls’ Romances,” “Young Love,” “Young Romances,” “Heart Throbs,” “Secret Hearts” and “Falling in Love” were the big seven titles. A lot of those storylines were purchased by the daytime soap operas.

How did you get into real estate? Around 1990, I was working for two high-net-worth families, trying to find ways to invest their capital with a partner. We both looked in the Wall Street Journal for two weeks in a row, and every headline was “Real estate is the worst business.” I knew nothing about real estate. But when you see something for two weeks be absolutely thrashed in the media, and you realize that it’s the largest part of the capital markets in the U.S., you sort of sense that there’s an opportunity. So we decided we needed to start a real estate business right then and there.

What was it like managing investment funds for the Burden, Vanderbilt and Ziff families? I had come out of business school and worked for a guy called Richard Rainwater. He had mentored me by saying, “If you really wanna see what you can do, get in front of a pool of capital that allows you to do anything.” Families can think in unconventional ways because they don’t have shareholders and they don’t have boards of directors. Both the Ziff and the Burden families, for whatever reason, hired my partner and I at a very young age and let us think that way. And we made plenty of mistakes, but we also learned quickly how to be two steps ahead.

During the financial crisis, you forfeited 2 million restricted shares in iStar that weren’t performing well. What were the biggest lessons you learned from that time? You can never afford to take your eye off the ball. I was going to retire in 2005 and I got very close to making that decision, and then the world changed. I wasn’t looking forward anymore. You can’t do that. That’s when you get caught. I had a cardinal rule: Liquidity is everything. But we got sloppy on liquidity. It killed us. Personally, it cost me a lot of years of my life, but I refuse to see a great company not come back, and we’ve been fighting ever since. It’s forced us to learn a whole new set of skills.

What was your first interaction with Asbury Park? I brought a date here 30 years ago. That was my first time in Asbury. It was a ruin. It was beautiful … But it was the wrong place to bring a date. I had a roommate who played Bruce Springsteen every minute of every day, so I was somehow subconsciously being drawn to Asbury Park, but I didn’t know it.

Why do you think there’s been some skepticism that a $6 million penthouse can sell in Asbury Park? Human beings aren’t that different, wherever you go. If you give them a great design, and a beautiful environment and a wonderful city and an incredible lifestyle, think about what that would cost you in New York or Montauk or the Catskills … We’ve suffered from headlines that say we’re selling $6 million condos. They don’t mention the $400,000 townhouses and some of the other projects we’re bringing. But this has to be aspirational.

What other projects are you working on? The ground-leasing business is really all-consuming right now. We’re the largest owner of bowling alleys in the world. We have built a great relationship with the largest operator of bowling alleys, company called Bowlero. We have 10,000 lanes in our portfolio. When you think about places where unconventional thinking can unlock a lot of value, nobody thinks of bowling as a business. But as a real estate business, it’s really interesting to us.

Why did you decide to become the managing owner of Keystone Sports [and the Philadelphia Union MLS soccer team]? I love sports. I love the unpredictability of it. I have two young boys, not so young anymore. That’s all we did together. Our hallway was our batting practice, pitching practice, soccer field. I knew the thing that would keep us together as a family for a long time was having something like that to always share. The good news is Philadelphia was within an hour-and-a-half radius of New York, so I knew I could go be an active participant, but it was far enough away that when the fans started yelling, I could retreat back to New York. We’re 10 years in, and we’re starting to figure it out.

How have you responded to criticism from Philadelphia Union fans regarding the need to recruit more top talent to the team? We’re trying to build a team that develops players. I think if we spend a lot of money on development, when others aren’t, we will have a very sustainable winning strategy when the league is much bigger. If we spend $10 million on a player, and he gets hurt, we’ve kind of got nothing left. It hurts when the fans are on you all the time, but winning solves a lot of problems in Philadelphia. So we just need to start winning.

What are your hobbies, aside from bowling and running a sports team? I practice with U.S. Open champion table tennis player Michael Landers. I love learning skills like that, that are outside the mainstream. I get to play with my kids at a wildly different level than I’ve ever played before.

Does your wife play? She hates sports. She’s a great designer, though, and has an incredible eye for spaces. Wish I could use her in these projects, but we’ve never crossed that line.

You and your wife have thrown some lavish parties at your Hamptons estate over the years [for charities and friends]. What was the most memorable of those? We try to keep that part of our life compartmentalized.

Have you ever hosted a fundraiser to encourage healthy eating, given that your last name contains “sugar”? I do have a big investment in a company called Moon Juice, which is one of the best adaptogenic, plant-based food companies out there. It’s got Sex Dust, Brain Dust, Beauty Dust, Power Dust, Spirit Dust and Dream Dust. If anything helps you feel better about life, it’s lowering your stress levels.

What’s your biggest vice? Cotton candy. There couldn’t be anything worse. But man is it good. If I go to a carnival, I want cotton candy. I’ll say that.

—Edited and condensed for clarity

Brand new Long Island City rental tower in Opportunity Zone tower hits the market

Posted: 28 Jun 2019 04:00 AM PDT

Steel Haus at 41-32 27th Street in Long Island City

A brand new luxury apartment building from the Hakimian Organization in Long Island City is hitting the market, according to sources familiar with the property.

The building at 41-32 27th Street is known as Steel Haus and stands 15 stories tall with 46 units. It includes a 15-year 421a tax abatement and is located within an Opportunity Zone. The building is expected to fetch in the $40 million range, sources said.

Cushman & Wakefield’s Stephen Preuss

A Cushman & Wakefield team led by Stephen Preuss is marketing the property, which spans about 30,000 square feet overall.

The building is still without a temporary certificate of occupancy but construction is completed.

The Hakimian Organization purchased the site in 2014 for $5 million, according to property records.

The company recently purchased a development site in Woodside for $33 million where it plans to build a mixed-use project. It also landed a $240 million mortgage from JPMorgan Chase and Citi Real Estate Funding for its Hell’s Kitchen office building at 636 11th Avenue.