The site of the overpriced and short-lived Sports Museum of America has fallen into city hands. The School Construction Authority, a wing of the city's Department of Education, has signed a more than 20-year lease for the 106,000-square-foot space.

The city is nowhere near as glamorous a tenant as the Sports Museum, but it's certainly a more reliable source of rent. The Sports Museum opened in May 2008 to much fanfare, with a mission to "to celebrate the breadth and depth of America's enduring love affair with sports." It closed in February 2009 in the depths of the recession after being unable to service its debt or attract the number of visitors originally envisioned (perhaps because the museum initially charged $27 a ticket).

Finding a new tenant for the cavernous space in the old Standard Oil building was something of an acrobatic task for Newmark Knight Frank's Jimmy Kuhn and Howard Kesseler, who represented both the landlord, The Chetrit Group, and the new tenant. The Chetrit Group bought the ground-lease for the Beaux-Arts building in 2007 for $225 million. Because the school needed a long-term lease—longer than the remaining length of the ground-lease—and because the lender would not refinance the debt on the property without a long-term tenant, completing the deal required the Chetrit Group to buy some of the land beneath the building from the Smathers family.

The Department of Education did not immediately respond to a request for comment on its plans for the new space.

But Mr. Kesseler told The Observer that, "It’s going to be a fabulous school. It’s got those Beaux-Arts windows. The ground floor is magnificent. It’s got really high ceilings. It’s really a beautiful, special space.”

drubinstein@observer.com

The union that nearly brought a doorman strike last month is planning a move to a new headquarters.

The Service Employees International Union 32BJ announced Monday that it has signed a 245,000-square-foot, 20-year lease at 620 Avenue of the Americas, at 18^th Street. The building, bought by the Chetrit Group in 2005 for $289 million, houses big-box retail along Sixth Ave, including TJ Maxx. (Interestingly, the Chetrit Group has had issues with using non-union labor.)

The lease is a large one, and probably not an expensive one given the location, although the rent was not disclosed.

The union was said to have been looking around at buying a building at the market's nadir—it reportedly looked at an AIG-owned property downtown—though, in the end, apparently opted for another long-term lease.

Its current lease is at 101 Sixth Avenue, signed in 1991, and the union plans a move by late 2011. 

Mark Weiss of Newmark Knight Frank represented 32BJ and Mitch Konsker and Matthew Astrachan of Cushman & Wakefield represented the landlord. 

ebrown@observer.com

Jamestown Properties and Rockwood Capital, along with Crown Acquisitions and Murray Hill Properties, finalized their deal to purchase 530 Fifth Avenue for a reported $390 million, officials said.

The property, which was previously owned by Joseph Moinian and the Chetrit Group, will receive a $20 million renovation to upgrade the building.

530 Fifth Avenue.

Improvements include a renovation to the building's lobby, a new security system, brand new elevators and a full-on reconfiguration for the mezzanine-level floors, which will be turned into additional retail space.

Jamestown Properties said it was approached last year by Haim Chera of Crown Acquisitions to gauge its interest in purchasing the property, said Michael Phillips, chief operating officer of Jamestown Properties.

“We decided we were [interested], and then we brought in Rockwood Capital as well,” he added. “It seemed like a great opportunity for all our firms.”

The 24-story space already had a strong retail presence, with tenants like Lenscrafters and Fossil, and a 35,000-square-foot space that at one point was scheduled to be a Syms store until the retailer pulled out last fall.

“The forties on fifth are really a dynamic place right now for retailers, but really also the office is very high quality for a building of its age,” said Mr. Phillips.

Rockwood and Jamestown assumed the largest ownership positions, said those close to the deal.

The Chetrit Group and Joseph Moinian paid $210 million for 530 Fifth Avenue in 2004.

David Falk, president of Newmark Knight Frank, will be spearheading all leasing for the office portion of the building, which features 24 floors that range from 7,300 to 32,000 square feet in size.

Apparently when it came time to triple up on the T-squares, architecture firm Goldstein Hill & West decided it was time to commit to its own office in Lower Manhattan.

The firm, which specializes in high-rise residential and hospitality buildings and counts Columbia University and Forest City Ratner Company among its roster of clients, signed a 10-year lease to take 8,500 square feet at 11 Broadway. The firm will be moving out of 4,000 square foot space it had subleased from GACE Consulting Engineers at 31 West 27th Street, Crain’s New York reported last week.

11 Broadway.

Goldstein Hill & West will be moving into the 17th floor, which can hold upwards of 60 staffers. Asking rent was $37 per square foot.

Michael Rouzenrouch and Abe Saks from Miyard Realty represented Goldstein Hill & West. Mendy Braun from Braun Management represented Bowling Green Associates, the landlord of 11 Broadway.

The Old World appeal of the 22-story 11 Broadway, which was built in 1898, helped seal the deal for Stephen Hill, a partner at the firm.

“[I] loved it right away,” Mr. Hill told Crain’s New York.

Mr. Hill, Alan Goldstein and David West have worked with a collection of prominent developers in the city, like the Chetrit Group/Stellar Management, Edison Properties, Extell Development Group and Silverstein Properties.

The firm, founded in 2009, has worked on 80 DeKalb Avenue for Forest City Ratner, a 36-story luxury rental tower that by 2010 had 234 units rented and was at 80 percent capacity. It has a total of 292 rental apartments.

When Aaron Jungreis sought a buyer for the Bossert Hotel at 98 Montague Street in Brooklyn Heights last year, a long list of obstacles stacked up.

The off-market deal meant potential buyers had limited access to the site. Complicated zoning meant the Board of Standards and Appeals would be thrown into the mix. And competition was fierce.

“It was a very complicated transaction, and there were just so many bumps in the road,” the president of Rosewood Realty Group said.

But Mr. Jungreis said the road opened up for a smooth ride when he identified Joseph Chetrit of Chetrit Group and David Bistricer of Clipper Equities as potential buyers. He would ultimately represent the “creative and easygoing” business partners as they scooped up the property for $81 million.

“He was just very easy to work with on everything,” Mr. Jungreis said about Mr. Bistricer. “There were a lot of moving parts, and you had to go hard on the deal. He never once lost his cool, always was calm, and just the way he handled it was remarkable.”

While the media-shy Mr. Chetrit continues to hide behind the shadows cast by his towering deals, declining to comment for this article, he and Mr. Bistricer’s $1.1 billion purchase of the Sony Building at 560 Madison Avenue brought Mr. Bistricer out from the shadows and into an exclusive interview with The Commercial Observer last week, in which he cautiously accepted his new role among the city’s real estate elite.

“When you buy buildings of this nature, it comes with a certain spotlight—that’s to be understood,” said Mr. Bistricer, who returned phone calls faster than anyone else contacted for this story—a surprise, given his business partner’s reputation. “The reason I called you is simple: the free press is an important function of the democratic world. If you asked me if I would rather you not call me, I’d probably say yes. But you do what you have to do.”

Mr. Bistricer outlined the deals that are building his legacy, sought to set the record straight concerning what he said were erroneous media reports about behind-the-scenes negotiations for the Sony Building, and vehemently defended the controversial Flatbush Gardens project in Brooklyn, which critics, including Public Advocate Bill de Blasio, have incessantly berated him about.

The Sony Building purchase pitted Mr. Bistricer and Mr. Chetrit against industry heavyweights like Joseph Sitt and Harry Macklowe. They won a competitive bid by slapping down a jaw-dropping $600 million letter of credit to seal the deal. “I’m sure it had to do with price and the confidence from the seller that we would be able to close,” he said about winning the deal. However, he added, “We weren’t the only ones at that level. There were very credible real estate developers at that same level. But we had a little bit of a different angle to it and different plans, so it’s not just the price but other factors involved.”

The duo plans to turn the tower into residential condominiums and a hotel, and to retrofit the retail space. He acknowledged that Joe Sitt and Harry Macklowe had been in the running and that the competition was fierce, but Mr. Bistricer denied that SL Green would become a major stakeholder in the deal, responding to reports in Crain’s claiming that Mr. Chetrit was in talks with SL Green to obtain up to $900 million of financing.

“It’s so out of what the truth is,” he said, though he declined to elaborate, citing the ongoing negotiations. “It makes amazing reading. But it’s just not correct ... they [SL Green] are not making loans to own the building.”

Mr. Bistricer, a 25-year industry veteran, was born in Belgium but raised in New York City; he made his way into the industry when he joined his father’s business, Clipper Equities, which was founded in 1951.

He came on the scene in Brooklyn with a number of residential conversion projects, establishing a stronghold in the borough with the successful hotel-to-condo conversion of the roughly 500,000-square-foot 365 Bridge Street in Downtown Brooklyn, funneling roughly $100 million into the renovations at the property several years ago.

“It was the beginning of the renaissance of Downtown Brooklyn,” he said. “We were one of the first down there that recognized the change that was going to come.”

While he prides himself on his Brooklyn acquisitions, for which he is perhaps best known, his endeavors now stretch into the office and hotel space, confirming his long-held reputation among many industry insiders as an astute and determined yet cool-headed businessman.

“He’s a very, very smart guy and operator in a complicated arena,” said Peter Hauspurg, chairman and CEO of Eastern Consolidated. “Now he has moved into the big leagues.”

But Mr. Bistricer certainly has his critics. Lawsuits and delays landed him on Public Advocate Bill de Blasio’s list of the city’s “worst landlords” in 2010 for alleged shortcomings at his buildings, particularly the 59-building affordable housing complex Flatbush Gardens, for which Mr. Bistricer paid $140 million in 2005.

As recently as this past summer, seven tenants at the complex filed a lawsuit in Brooklyn Housing Court against Mr. Bistricer for alleged failure to make repairs. But he maintains that the project was purchased because he believed upgrading the affordable housing there was “the right thing to do,” and he asserted that his company had resolved more than 10,000 outstanding violations at the property.

“I think the turnaround is quite amazing,” he said. “We aren’t just concentrating on violations, we are concentrating also on infrastructure—boilers, burners, roofs—and about half the units on that project have been renovated.”

“The criticism is definitely unwarranted,” he went on. “I think some people had an agenda when they were criticizing us, including Mr. de Blasio. We met with him, we showed him what we were doing—it was a work in progress. But he had his agenda with what he was doing.”

Asked to elaborate, he stated, “I’m not interested in starting a campaign here—that’s not me.”

Mr. de Blasio declined comment for this article, but his spokesperson confirmed that Mr. Bistricer’s last building came off the list in September 2011.

Mr. Bistricer also found himself in the spotlight during his repeated attempts to purchase the massive Starrett City affordable housing complex in Brooklyn with a $1.3 billion bid in 2007.

He was ultimately unable to jump through the hoops created by the city and the state, including an injunction put in place by then-Attorney General Andrew Cuomo. But that didn’t lessen his image, at least among industry insiders who have followed him throughout his career.

“I remember in the ’90s, he tortured some banks pretty good,” said one company executive who spoke only on condition of anonymity. “He fought them off in foreclosure, bought some loans and litigated pretty extensively. He’s just very tough, and I think we saw that again when he was trying to take over that project [Starrett City].”

Now that Mr. Bistricer is off Mr. de Blasio’s list, like it or not, he finds himself on a list that even the most cynical of real estate insiders would secretly envy, as he sits alongside some of the most lauded real estate tycoons in the city.

In addition to the undertaking at the Sony Building, Mr. Bistricer and Mr. Chetrit plan to transform the Bossert into a boutique luxury hotel with about 300 rooms, after paying the $81 million for it last year.

“There aren’t many buildings like it,” he said. “We’re not doing anything to the outside, because obviously it’s a landmark in very good shape ... the architecture is just amazing.”

The project got the go-ahead for the hotel conversion last month, when the Board of Standards & Appeals approved their request for a variance to change the Certificate of Occupancy for hotel use.

“They had to be very creative,” Mr. Jungreis of Rosewood Realty Group said. “It wasn’t a due diligence deal, where you have 90 days to get the approval. You had to basically go hard and get the approvals after. And the fact that he did that, to me, was incredible.”

Among the other projects the business partners have lined up is the $25 million pickup last year of a development parcel at 77 Commercial Street in Williamsburg, which can accommodate 270,000 square feet of development. The developers will raze the existing commercial structure and replace it with a residential building, Mr. Bistricer said.

While unwilling to get into the gritty details about his relationship with Mr. Chetrit, Mr. Bisticer said the two met roughly seven years ago though mutual friends, calling him a “very good partner.”

“It started with business, and as the business develops, you become friends too,” he said.

But will he talk?

“I doubt it. I doubt it,” Mr. Bistricer said, laughing, but then rushed to defend Mr. Chetrit, like any good friend would.

“He’s very busy, and maybe he feels he can’t control the process of the press and what the press is going to write—this and that. It’s not a surprise. A lot of people don’t want to talk to the press.”

In one of the largest real estate deals in recent memory, Comcast will purchase from General Electric the properties used by NBCUniversal at iconic 30 Rockefeller Plaza and CNBC Headquarters as part of its acquisition of GE’s remaining 49 percent equity stake in the media company, it was announced earlier this week.

Though the building is owned by Tishman Speyer, the office and studio space at 30 Rock involved in the deal is owned by GE and is considered a commercial condo. GE will keep space in the building on the 52^nd and 53^rd floors.

The real estate component of the deal accounts for approximately $1.4 billion of the $16.7 billion transaction and trumps the $1.1 billion sale of the Sony Building to the Chetrit Group last month.

Having a location such a 30 Rock is important for branding and has become part of many media companies’ business models, Todd Mitchell, director of research at Brean Capital LLC, who covers Comcast and other media companies, told The Commercial Observer.

“If you look at these guys, there is an element of having a physical manifestation of your business, whether it be 30 Rock or the Time Warner Center, all these places have studios down on the street level,” said Mr. Mitchell.

What makes NBC unique is the fact it has been able to maintain a physical presence in one of the most iconic and expensive pieces of real estate in Manhattan, Mr. Mitchell said.

The CNBC Headquarters in Englewood Cliffs, New Jersey provides real estate in a lower cost market, which is also more accessible for many employees, Mr. Mitchell said. “It’s very similar to Goldman [Sachs] having their headquarters in Battery Park and operations in Jersey City,” he noted

According to a statement, the transactions are being funded with $11.4 billion of cash on hand, $4.0 billion of subsidiary senior unsecured notes to be issued to GE, $2.0 billion of borrowing under Comcast and/or subsidiary bank credit facilities and $725 million of subsidiary preferred stock to be issued to GE.

Morgan Stanley and Davis Polk & Wardwell LLP, served as Comcast’s financial and legal advisors, respectively.

Calls to Comcast and Tishman Speyer were not returned by press time.

The city announced yesterday that it will sell two Civic Center buildings at 49-51 Chambers Street and 346 Broadway for nearly $250 million to Chetrit Group and The Peebles Corporation.

Chetrit -- in the midst of a buying spree -- and Peebles were selected following an RFP issued in April of last year as part of the Bloomberg administration's plan to reduce underused government office space by 1.2 million square feet by 2014.

The developers plan to restore the buildings and redevelop them as as a mix of hotel, residential and community space.

(tribecacitizen.com)

"In 2010, we set a goal of reducing city agency office space by 10 percent within four years – equivalent to 1.2 million square feet," said Mayor Michael Bloomberg in a statement announcing the agreement.  "Today's agreement brings us more than 80 percent towards that goal, dramatically reducing the amount of office space used by City agencies and making agency operations more efficient and less costly."

The Chetrit Group will pay $89 million for 49-51 Chambers Street and convert it into residential and retail space; and The Peebles Corporation will pay $160 million for 346 Broadway and is expected to convert the property into a mixed-use building with residential, hotel, retail and community facility components.

And as part of the agreement, The Peebles Corporation will convert 16,000 square feet at 346 Broadway into a digital arts and media space dedicated to public use.

The sale will net an estimated $120 million in revenue for the city after relocation and other costs, but the city will save an additional $120 million in operating expenses over the next two decades; and it brings the total office space eliminated since the initiative kicked off in 2010 to more than 1 million square feet, which is projected to save $470 million in annual rent and operating savings over the next 20 years, according to the statement from the city.

"With the sale and redevelopment of these historic buildings, they will not only be restored and put to better use, but they will also bring a significant economic and cultural impact to Lower Manhattan and the entire city," said New York City Economic Development Corporation President Seth Pinsky, in the statement.

The projects are anticipated to raise more than $500 million in private investment, generate more than $70 million in additional tax revenue over the next 30 years and create more than 550 construction jobs and 60 permanent jobs.

The city acquired the buildings in the 1960’s as part of a larger plan to improve the Manhattan Civic Center that ultimately never came to fruition.

The Hotel Chelsea at one time was home to literary lions including Mark Twain, O. Henry and Tennessee Williams. But since the enigmatic developer Joseph Chetrit purchased the bohemian citadel for $78.5 million in 2011, court documents have constituted the bulk of the Chelsea’s written output.

In the past year, owners have proposed a controversial expansion to accommodate a rooftop bar; tenants, joined by Christine Quinn, have rallied and brought litigation against unsafe conditions stemming from renovations; a judge demanded that the Chetrit Group return 22 paintings to an artist’s widow; a blind man sued ownership after falling into a sidewalk elevator and losing the finger with which he reads braille; and, on March 22, the Department of Buildings issued a stop work order after “illegal gas piping” cut off heat and hot water.

“It’s the theater of the absurd,” said Zoe Pappas, president of the Hotel Chelsea Tenants Association and a resident since 1995. The association was formed in September 2011 in response to unsafe conditions created after Mr. Chetrit’s purchase of the building and its transition into a swank hotel under the guidance of architect Gene Kaufman. In December of 2011, the tenants filed a lawsuit against the Chetrit Group, and subsequent litigation and complaints have revolved around mold, asbestos and fire hazards.

“It’s not about who bought the building,” Ms. Pappas said. “It’s about what they did to the building and to all of us.” For his part, Mr. Chetrit filed suit last month through Chelsea Dynasty LLC against the Chelsea’s former owners, alleging “misrepresentation” of the property during its sale.

Ms. Pappas said that communication outside of court and bureaucratic channels has been limited. “The landlord is unavailable, as are his representatives,” she said. “They never returned anybody’s call.” (The Chetrit Group did not respond to The Commercial Observer’s repeated requests for comment over the phone.)

Last week, almost one year after winning an agreement in housing court that gave the landlord a deadline for necessary repairs, the HCTA filed a criminal motion to hold ownership in contempt of court.

Ms. Pappas said that at the moment, between 87 and 95 people live in the Chelsea, which contained a total 276 units—86 of them rent-stabilized—under the old ownership. “You’re wrong if you think people in the Chelsea pay $200 or $300 a month,” she said. “Very few people pay lower rent. Others pay $1,500, $2,500 or more.” She added that only “one or two” people left following evictions, although in 2011 ownership filed motions to evict 10 tenants.

The photographer Linda Troeller told The Commercial Observer that she was just evicted as of March 31, on the grounds that she had not lived in the building 183 days in the past year. She is in the process of appealing. “What’s most important is to stop the harassment,” she said. “We don’t live in the world where [former owner] Stanley Bard let Milos Forman spend a year here without paying. But I do pay my rent, and I live in this room.”

Ms. Troeller claims her appeal will be decided next month. The acute growing pains of the Chelsea as it becomes a more traditional, polished hotel should continue well beyond that date, and the HCTA is ready for a long fight.

“This is not a game of cat and mouse. We’re protecting our rights, because [the Chetrit Group] wanted us out abusively,” Ms. Pappas said. “They warehoused checks. They sent eviction notices then cashed checks. It’s like the Wild West 200 years ago. They have no right to trample upon legality, humanity, common sense and morality.”

From a Taconic Investment Partners project in Hunts Point to the World Trade Center site in Lower Manhattan, power in New York real estate circles has increasingly expanded from the comfortable confines of Midtown Manhattan to the fringes of all five boroughs. While large developments such as the Related Company’s Hudson Yards often dominate the conversation, Brooklyn, Queens and even the Bronx continue to grow in stature.

Long Island City is fast becoming a focal point for the real estate industry as Rockrose and other residential developers tap into the growing Queens neighborhood. In the Bronx, Taconic Investment Partners, formerly the owners of 111 Eighth Avenue, is in the process of a significant capital improvement plan at the BankNote Building on Lafayette Avenue in Hunt’s Point.

Below, a sampling of where power thrives in New York City in 2013.

Gary Barnett, founder of Extell Development, is seeking approximately $1 billion in financing from Export-Import Bank of China for the planned condominium development at 225 West 57th Street, The Wall Street Journal reported earlier today.

If the deal is closed, it would likely be the largest loan for a U.S. real estate construction project since the market downturn, according to the Journal report. The project, as designed, would be the largest residential building in the United States, rising just a block away from Extell's soon to be completed One57 residential tower.  Last year, Nordstrom agreed to anchor the development with its first New York flagship location.

Gary Barnett

"The Chinese bank will provide financing on very favorable terms," said Joel Rothstein, an attorney at Paul Hastings LLP, in an interview with the Journal.

Chinese banks have emerged as some of the most active foreign lenders in the New York real estate market, though mainly for commercial acquisitions and refinancing. Bank of China, along with SL Green, provided a $900 million loan for The Chetrit Group's acquisition of the Sony Building. The state-run bank was also part of a syndication of banks, which included Deutsche Bank and Goldman Sachs, that provided a $900 million loan which was securitized on 1515 Broadway.

30 Rockefeller Plaza

There were three whopping commercial deals in New York City last year in the trillion-dollar price range, blowing away the other commercial transactions for the year in terms of price, according to a report by PropertyShark provided exclusively to Commercial Observer. 

The priciest deal was Comcast’s $1.3 billion purchase of 1.3 million square feet of office and studio space at 30 Rockefeller Plaza, part of the media and communications giant’s $16.7 billion purchase of a 49 percent stake in NBCUniversal from General Electric.

Second was the Carlyle Group’s sale of the 27-story office and retail tower at 650 Madison Avenue to Crown Acquisitions and Highgate for roughly $1.3 billion. The purchase of the 600,000-square-foot building was the largest in the U.S. after Google‘s acquisition of 111 Eighth Avenue from Taconic Investment Partners in 2010.

Third was at 550 Madison Avenue. Sony sold its U.S. headquarters at the building to the Chetrit Group for $1.1 billion. In an email to Sony employees, Nicole Seligman, president of Sony Corp. of America, said that 550 Madison Avenue had “considerable value locked in it” due to its location and its architectural provenance. It was designed by Philip Johnson.

The other seven biggest transactions for the year were under the $1 billion mark, with prices ranging from $498.45 million to $876.78 million.

The commercial sales market has been thriving since 2009 with 4,517 deals in 2013, up 2 percent year-over-year, and sales volume of $46.23 trillion, up 29 percent from 2012.

In the over-$50 million category, the number of transactions rose 207 percent to 46 deals in fourth-quarter 2013 versus 15 in the third quarter, but dropped 18 percent year-over-year. Meanwhile, the number of overall transactions increased a marginal 3 percent to 1,231 deals versus the quarter prior and dropped 22 percent compared with fourth-quarter 2012. 

Sony Corporation of America has signed a 15-year, 525,000-square-foot lease at 11 Madison Avenue, the company confirmed today.

The U.S. branch of the Japanese conglomerate will occupy the top 10 floors of the building, as well as the rooftop overlooking Madison Square Park. Additionally, Sony will have a dedicated entrance to the building with the address 25 Madison Avenue.

11 Madison Avenue (Courtesy of PropertyShark)

“We’re excited to be moving to this magnificent building in one of New York City’s most dynamic and desirable neighborhoods,” said Nicole Seligman, president of Sony Corporation of America, in a statement.  “Our new home will put us right where we belong: among the city’s leading cutting-edge technology and entertainment companies.”

Sony will relocate from its U.S. headquarters space at 550 Madison Avenue in early 2016. The company sold the Midtown property to a Chetrit Group-led partnership last year for $1.1 billion.

The company's move to Sapir Organization and CIM Group-owned 11 Madison Avenue had been rumored for some time. The New York Post first reported that Sony had a term sheet for the space in September of last year, though the company denied the deal was done in an email to employees. The move was ultimately facilitated when Credit Suisse, the building’s anchor tenant, agreed to consolidate into 1.5 million square feet at the base of the building.

“We are pleased to have Sony join our other long-standing anchor tenant, Credit Suisse, and to have two world-class corporations that have made long-term commitments to the building,” added Alex Sapir, president of Sapir, in the statement.

Howard Fiddle, Brad Gerla, Zachary Freeman and Zakery Snider of CBRE represented the landlord in the transaction. Greg Tosko, Lauren Crowley Corrinet, Brendan Herlihy and Mary Ann Tighe, also of CBRE, represented the tenant. The brokers were not immediately available for comment. 

A little extra money never hurts when it comes to arrested development.

Arbor Commercial Mortgage has provided a $70.1 million loan to a group of borrowers for several long-planned commercial condominium units at 511 Ninth Avenue in Hell’s Kitchen.

511 Ninth Avenue (Photo by Damian Ghigliotty)

The loan from Arbor closed on March 19. The borrowers, listed in public records as Salim Assa, founder of Assa Properties, the Chetrit Group’s Meyer Chetrit and Read Property Group’s Robert Wolf, are getting ready to finish construction on the postponed hotel and luxury condo property.

Assa purchased the site between West 38th and 39th Streets in 2006 and began selling residential condo units there in advance for between $700,000 and $4 million in 2009. The Chetrit family and Mr. Wolf made a $15 million investment in the $150 million project in 2012, according to previous reports.

The 12-story hotel and condo development, which is now under a partial stop-work order, has faced multiple delays since construction began in September 2007, data from the New York City Department of Buildings show. A recent complaint was filed on March 26. While the building’s exterior is in place, construction on the inside is still underway.

The completed development will reportedly contain a 99-room hotel and more than 100 condominium units, six of them for commercial purposes.

A spokesperson for Arbor Commercial Mortgage declined to comment. Assa Properties and the Chetrit Group did not return calls for comment in time for publication.

Willis Tower in Chicago

Chicago’s Willis Tower was transferred to special servicing this week due to “imminent monetary default,” according to Fitch Ratings, which tracks the senior CMBS debt on the building’s loan. The 110-story tower was, until last year, the tallest in America. One World Trade Center was ruled tallest in November.

The borrowers, a group that includes a number of prominent New York owners and developers led by Joseph Chetrit’s Chetrit Group, owe almost $500 million in senior CMBS debt and about $774 million total, according to data from Fitch.

Mr. Chetrit’s firm led the $840 million purchase of the 3.8 million-square-foot tower with partners that included Lloyd Goldman, Joseph Moinian and Jeffrey Feil in 2004, according to reports. Chetrit reportedly made the $30 million down payment for the buy.

The special servicer for Willis Tower—formerly Sears Tower—is CWCapital Asset Management, an affiliate of New York-based Fortress Investment. The master servicer on the debt had been Wells Fargo.

“According to the servicer, the borrower anticipates significant capital costs going forward in order to secure additional new leases,” the Fitch report said. The tower is 83 percent leased, up from 75 percent last year, according to the report.

The tower was last upgraded in 2009, according to the website, when “Skydeck Marketplace,” a retail development on the building’s 103^rd floor, opened.

Asking rents for Class A office space in Downtown Chicago are currently hovering at around $35 per square foot, according to the latest report from JLL. Leasing activity overall was down 24 percent year-over-year in the fourth quarter of 2013 and vacancy was over 15 percent, the data show.

CWCapital declined to comment, and a person at the Chetrit Group’s office said that representatives were not available for comment due to a Jewish holiday this week.

Last year, Mr. Chetrit and partner David Bistricer purchased the Sony Building, at 550 Madison Avenue, for $1.1 billion.

Greenpoint along the East River. (Michael Nagle)

Greenpoint may not be as sleek as Williamsburg, and the neighborhood is still a (diminished) Polish stronghold, but it’s gaining more attention now as residential developments, many stalled during the recession, prepare to dot the still-scrappy waterfront.

“It’s just a matter of evolution,” said Ofer Cohen, the founder and president of Brooklyn commercial brokerage TerraCRG, during a tour of Brooklyn’s northernmost neighborhood. He was referring to how Greenpoint would naturally follow in the gentrified footsteps of Williamsburg, its more developed neighbor to the south. “Now that Williamsburg is done in terms of large-scale development, Greenpoint is next,” Mr. Cohen said.

He and colleague Peter Matheos escorted Commercial Observer around the area last week in Mr. Cohen’s BMW X5. They pointed out existing developments and those in the pipeline along the waterfront.

There are a myriad of them, most with a retail component at the base of the buildings.

“Everything that’s coming is residential and retail,” said SCG Retail’s Geoff Bailey. “That’s what led the charge in Williamsburg.”

The two biggest developments on the way are the adjacent 19-acre, 5,000-unit Greenpoint Landing, developed by Park Tower Group-affiliate Greenpoint Landing Associates, and Chetrit Group and Clipper Equity’s 77 Commercial Street, with more than 600 units.

As the two projects that will dominate the Newtown Creek/East River waterfront, they engendered a great deal of community opposition to their height and density.

While the general shapes of the buildings were approved in 2005, the City Council voted in favor of key aspects of Greenpoint Landing—additional affordable housing, a public elementary school and open space—last December. That month, the City Council also greenlit 77 Commercial Street, with its two 30-story buildings.

Greenpoint Landing Associates last week broke ground on the first building at the site, which spans from Clay to Green Streets and from the water to West/Commercial Streets. The building at 21 Commercial Street, will have 93 units and be 100 percent affordable in perpetuity. The building will house about 2,800 square feet of ground-floor retail along Commercial Street.

Johanna Greenbaum, a vice president of Greenpoint Landing Associates, added: “We were invested in the neighborhood. We’ve been part of [it] for a very long time. We bought [the property] before 2005. I think there was a real belief in north Brooklyn before this current wave of interest.”

Other projects of note slated for development by the river on West Street are Palin Enterprises’ 500-unit 155 West Street, RedSky Capital’s 1-million-square-foot 131 West Street, Java Street Realty’s 500,000-square-foot-plus 109 West Street and 26 West St. LLC’s 55,000-square-foot 26 West Street. There’s also Cayuga Capital’s proposed 44 Kent Street at West Street, with 48,000 buildable square feet. Two blocks inland are Bo Jin Zhu’s 400-unit 280 Franklin Street and 265,000-square-foot 49 DuPont Street.

(New York Observer and TerraCRG)

All of the activity in Greenpoint makes the low-slung ethnic (and cool kid) enclave resemble the late-’00s Williamsburg.

Polish emigration to the Greenpoint waterfront started around 1850, and that population stayed there for nearly a century, according to The Sixth Borough blog. Meanwhile, industry on the Brooklyn waterfront gave way to the rise of container ships before deindustrialization made room in north Brooklyn for a flood of artists in the 1990s. (Demographic changes aside, Polish butchers and pierogi joints abound to this day.)

While Greenpoint has seen less hype than Williamsburg, the neighborhood gained some pop culture cred as the setting of the HBO series Girls, which first aired in 2012.

“The residential up in this market, it’s a direct parallel to Williamsburg, where you had this industrial waterfront that was rezoned [in 2005] and the residential density … led the retail to come in behind it,” said Mr. Bailey, who is co-marketing the 8,000-square-foot retail space at 1133 Manhattan Avenue, Domain Companies’ 210-unit residential project a few blocks off the waterfront.

Rendering of the Greenpoint Landing esplanade. (James Corner Field Operations)

While 1133 Manhattan Avenue is more a part of industrial Greenpoint, it “will feed off of the waterfront in time,” said David Maundrell, the founder and president of Brooklyn real estate firm aptsandlofts.com.

While developers have been chomping at the bit since Mayor Michael Bloomberg’s 2005 rezoning of nearly 200 industrial blocks in Greenpoint and Williamsburg, the recession stymied much of the development. One broker noted that developers have been back on track since last year.

Mr. Maundrell, who grew up in the area, said the Greenpoint waterfront looks the same as when he was a kid, but it’s “safer” with fewer “burnt out cars, less bodies. Before you could sneak around and have keg parties.”

Andrew Till, the vice president of asset management for Meadow Partners, said the company’s 130-unit 110 Green Street benefits from being closer than waterfront properties to the G train’s Greenpoint Avenue station. He added that since it sits between Manhattan Avenue, the main retail drag, and the hip boutiques and cocktail bars of Franklin Street, that residents have prime shopping access.

(Local G train service—the perennial bane of Greenpointers’ existences, is currently down for five weeks of repairs, an inconvenience that could auger infrastructure headaches to come with the new development.)

“I personally consider the waterfront a little more fringe,” Mr. Till said. In addition to subway inaccessibility, the waterfront clings to an industrial feel, which deters some affluent homebuyers even as it lures artsy types.

Mr. Till said there is room for retail growth—some say for the worse—in Greenpoint.

“Where there are apartment buildings, there are people who need prescriptions,” Mr. Till said. “I think [Manhattan Avenue is] going to change like everything else does. You’re going to see the Duane Reades. It’s inevitable.”

Dan Marks of TerraCRG put the retail rents along Manhattan Avenue between $65 and $80 per square foot. Mr. Bailey put the figure at $60 per foot.

Mr. Marks said the warehouses that have been converted into offices scattered throughout Greenpoint have rents starting at around $30 per square foot. But large office and commercial development has been scant.

“There’s not much office to speak of,” Mr. Bailey said.

That said, the crowdfunding tech startup Kickstarter moved its 80 employees to Greenpoint in January after buying 58 Kent Street, the former Eberhard Faber Pencil Factory, for $36 million. And Joshua Guttman’s glassy, 40,000-square-foot-plus Brooklyn Expo Center at 79 Franklin Street will open with a Sept. 12 antique and book expo.

One of the big players in the Greenpoint commercial real estate arena is Broadway Stages, one of New York’s largest full-service film, television and music production facilities. The company has 1.2 million square feet of space for studios, support functions, production, parking and offices throughout Greenpoint.

Gina Argento, a co-president of Broadway Stages with her brother Tony, said the company decided to move to Greenpoint 16 years ago because it could find big warehouse space. She and Mr. Argento also liked “that it was community-oriented.”

But will that neighborhood feel evaporate once the onslaught of new housing fills up as many contend it has in the new, glossy Williamsburg?

There’s been opposition in Greenpoint toward Greenpoint Landing and 77 Commercial Street, since between the two waterfront towers there will be more than 6,000 new residential units

“... to distraught residents... the giant ‘monstrosities’ showed ‘complete disregard’ for the neighborhood’s needs,” according to a DNAinfo article from May 2013. Other issues included “a lack of transportation, inadequate park space for the influx of people and the towers’ environmental impact.”

Greenpoint along the East River. (Michael Nagle)

Ms. Argento, for one, who is working on moving to Greenpoint, has seen more families moving back to the neighborhood and is not concerned about a potential Duane Reade-ization.

“I’m not worried about the [residential] towers,” she said. “The families moving into Greenpoint want to maintain family businesses because that’s what attracted them to the area. If we lose that, I think we will lose a lot.”

Council Member Stephen Levin, who represents several Brooklyn neighborhoods including Greenpoint, where he lives, said it’s unfathomable at this point what Greenpoint will look like once all of the residential development is built.

“You’re talking about probably 20,000 new people in a neighborhood with a population of 37,000 as of the 2010 census,” said Mr. Levin. “The impact will be tremendous.”

Residents are still troubled by the 2005 rezoning and the development floodgate it opened, an issue that Mr. Levin said he ran on last year for his reelection.

“It was a massive rezoning,” Mr. Levin said. And “I don’t think it was a very good rezoning. I think it created way too much density on the water and did not accurately anticipate the value of commercial development in Brooklyn that’s been happening over the last couple of years.”

Despite some lingering doubts about the wisdom of the rezoned waterfront, retail there will inevitably follow once the new housing units are occupied.

“You need that density to support these retailers,” said Ryan Condren, the managing director of retail leasing at CPEX. “It’s an organic effect that takes time. Retail really follows the residential. Once the community gets denser the retail will continue to evolve.”

135 West 52nd Street. (PropertyShark)

Prolific development duo Joseph Chetrit and Clipper Equity received $228.5 million in construction funds to convert a Midtown hotel that was foreclosed on last year to a combination of office and residential condominiums.

The Flatotel, at 135 West 52nd Street, will become a five-floor “boutique” office condominium and 37 floors of luxury residential condos, according to a representative for Meridian Capital Group, which brokered the loan with Deutsche Bank. 

Sales of condos at the $300 million project have commenced, according to StreetEasy. The lone unit to sell so far, #35A, went for $8.5 million, closing on the same day as the construction loan did—Monday—according to city records. The other 108 condo units are listed for an average of $2,120 per square foot according to StreetEasy, with several homes in contract.

The two-year, non-recourse, interest-only construction loan has a floating Libor-based interest rate and a one-year extension option, according to Meridian. Clipper, Deutsche and Mr. Chetrit’s Chetrit Group all failed to immediately respond to request for comment.

Chetrit and Clipper bought the building early last year from a venture among the Rockpoint Group, Atlas Capital Group and Procaccianti Group for $180 million, according to previous reports. That venture bought the debt on the 289-room hotel from Anglo Irish Bank after previous developer the Alexico Group fell in to trouble, reports show.

Chetrit and Clipper financed the acquisition with a $115 million loan from the Variable Annuity Life Insurance Company, according to city records. VALIC is a subsidiary of notorious insurer American International Group.

Meridian’s Aaron Birnbaum and Emanuel Westfried negotiated the most recent loan deal as well as the mortgage for the initial buy, according to the firm’s representative. The proceeds of the construction loan will also be used in part to refinance the acquisition loan.

“The project has enjoyed a significant level of presales and construction [and] is well underway and being funded with equity, making this an attractive opportunity for lenders,” said Mr. Westfried in a statement provided exclusively to Mortgage Observer. “Meridian was able to identify several capital sources interested in financing the transaction on a non-recourse basis.”

1384 Broadway. (Winick Realty Group)

Garment Center Congregation will temporarily move to the second floor of the Chetrit Group's 1384 Broadway between West 37th and West 38th Streets, Commercial Observer has learned.

In a deal signed tonight, the Orthodox synagogue will operate out of the entire 7,131-square-foot space through a short-term (three or five years depending on the construction schedule of the new space) lease, according to developer Sharif El-Gamal, the chairman and CEO of Soho Properties.

“We selected this space because of its close proximity to the congregation’s current location," Mr. El-Gamal said through a spokesman. "The interim space is perfect to meet the needs of the congregation and insure that current services and programs can continue without interruption.”

Garment Center Congregation will have a synagogue, social hall and offices in the temporary quarters, said Rabbi Norman Listokin of the Garment Center Congregation. As part of the deal, Garment Center Congregation will hold High Holiday services at Gotham Hall at 1356 Broadway between West 36th and West 37th Streets.

In March, Soho Properties, MHP Real Estate Services and hotelier Hampshire Hotels Management are moving the synagogue from its current 11,000-square-foot home at 205 West 40th Street between Seventh and Eighth Avenues to the interim space so they can replace the West 40th Street building with a $300 million-plus, 120,000-square-foot retail center and Dream Hotel, as CO previously reported. After the hotel and retail condominium are complete, the developers will move the synagogue back into a new facility onsite.

At 205 West 40th Street, the developers will create a new synagogue that "will be in keeping with the size of their current space and will insure that the congregation will be able to preserve their legacy and service to the community for many years to come," Mr. El-Gamal said. The existing building is expected to be torn down in 2015.

MHP's president and chief executive officer, Norman Sturner, didn't respond to a request for comment.

James Tamborlane of MHP represented the developers in the deal and Lee Block of Winick Realty Group represented Chetrit. No one from Chetrit responded to a request for comment and nor did Mr. Block through a spokeswoman.

428 Broadway

The Soho mixed-use building known as the Suspenders Building has been refinanced to the tune of about $70 million, according to records filed with the city today.

The cast-iron building at 428 Broadway is owned by the Chetrit Group, which bought the six-story property for $22.5 million in 2005.

Greenwich, Conn.-based lender Jeffries LoanCore provided the $70.5 million mortgage. The most recent loan appears to replace a 2012 note from PB Capital.

The $57.9 million PB Capital loan was backed by five Chetrit-owned properties and was transferred to Union Bank when PB’s commercial real estate unit was sold off to the bank in 2013, records show.

The brick and limestone loft building sits at the corner of Howard Street and offers retail and office space.

Neither Jeffries Loan Core nor Chetrit representatives were immediately available to comment.

Hotel Carter. (TripAdvisor)

Chetrit Group has closed on its $191.9 million purchase of the infamous Hotel Carter, public records filed today show, and took out $150 million in mortgages from Athene Annuity, a Wilmington, Del.-based life insurance company.

The seller of the former flophouse at 250 West 43rd Street was Alphonse Hotel Corp., a company controlled by the heirs of deceased Vietnamese businessman Tran Dinh Truong. Attorney Ernst Rosenberger of Stroock & Stroock & Lavan, the court-appointed temporary administrator of the Truong estate, said the building was sold in order to distribute the assets. Since Truong had no will, it has been, and remains, unclear, who the distributees are, Mr. Rosenberger said.

The Wall Street Journal reported when Chetrit Group's Joseph Chetrit agreed to the acquisition of the 600-room 1930 property between Seventh and Eighth Avenues last September. The sale closed on Jan. 22, according to property records.

Eastdil Secured represented both parties in the sale and represented Mr. Chetrit in the financing.

In addition to the Hotel Carter, the Truong estate includes a property in Philadelphia as well as a Manhattan building at 239 Elizabeth Street, the latter which can't yet be sold.

"We have some claims pending so we're not listing it for sale yet," Mr. Rosenberger said. "[Two tenants in the building, who are daughters of Truong, are] claiming a 20-year rent-free lease."

Chetrit Group didn't immediately respond to a request for comment, but Mr. Rosenberger said, "The buyer plans to remodel and modernize the hotel. They plan to keep it as a hotel."

A source with knowledge of the deal emailed: "Mr. Chetrit is going to make it/rebuild it so to be an incredible hotel for tourists."

With additional reporting by Guelda Voien.

Update: This story was edited to include a quote from a source as well as the address of the Elizabeth Street property.

A rendering of the project at 77 Commercial Street.

A partnership of The Chetrit Group and Clipper Equity took a $27.5 million bridge loan, backed by the land at 77 Commercial Street in Brooklyn’s Greenpoint neighborhood, Commercial Observer has learned.

As Commercial Observer has reported, the pair plans to develop a 720-unit, two-tower residential complex at the address. The land looks over Newton Creek—some of the last undeveloped waterfront land in the nation’s trendiest borough.

The City Council approved the plan last year, according to reports.

The two-year loan, with an interest rate over U.S. prime, was provided by New York Community Bank, a source close to the deal said on the condition of anonymity. The fixed-rate loan features all interest-only payments. The loan will be used to acquire air rights, the source said.

Meridian Capital Group negotiated the loan, a spokesman for the brokerage confirmed. Meridian Executive Vice President Aaron Birnbaum and Vice President Tal Savariego handled the deal, the representative said.

“The borrower acquired the waterfront site in 2012 and recently finalized a development agreement to acquire additional air rights from New York City Housing Preservation and Development,” said Mr. Savariego via the spokesman. “Meridian arranged a competitive balance sheet land loan to provide the borrower funds for the air rights purchase and additional time to finalize plans and arrange construction financing for the project.”