One Madison Park future?

Price cut on 16A?

Just so I don't jump the gun on this one . . . here are the facts.

16A was shown in the AG filings as sold to a third party on 10/12/2007 for $6 Million (with a $600,000 downpayment). That's a fact.

The actual sale came through to a party with a different name for $5 Million. That comes to just over $1,800 SF . . . for a really low floor, but one with a wraparound balcony.

Without knowing more -- it looks like the $6M buyer either bailed or sold at a huge loss -- but someone please correct me with other possibilities.

For amusement, check out the "asking" prices in the listings for this property. They started at $8.25M in 2007 and dropped steadily, with the latest listing showing at $6.9M.

For reference, this is the unit with the terrace on the top of the first set of "cubes" (it's not the 16th "construction floor"). The upside is the terrace, and a full floor unit with a decent layout. The downside is that it is a low floor (and doesn't clear some of the surrounding buildings). But it does have terrific, more human views of the park, and spectacular empire state building views.

$5M seems like a good/fair price. That $1800/sf for a unit with a terrace probably translates to $1,500 or $1,700/sf for a non-terraced unit at that level. Much closer to current market for park facing units.

Looks like Wendy and the gang are learning to play StreetEasy. It now shows only 2, yes 2, units available for sale. Everything else now appears to be "Sold".

Now there might be a reporting glitch as StreetEasy harvests data . . . but if it isn't, it feels just a little desperate.

The facts seem to be, plenty of units available (just check the BHS website), very few closings, and indications of price drops on the most recent closings.

I'd love to hear the current sales pitch.

flatirony, they're not listed as sold. they're listed as no longer available. which could mean sold, or not.

That's true. Though the point still stands -- it results in showing a limited inventory available for sale which is simply not the case. Many of the units listed as "not available" clearly are available.

And I'd love to know whether there is some distinction between those shown as "in contract" and those shown as "not avialable".

Again, I grant you that StreetEasy doesn't collect perfect data -- so it can all just be a glitch.

i doubt it's a glitch. i'd bet that people in contract were noticing relistings, so they pulled them all, left a couple still standing to create some possibility of credibility, and are looking for obfuscation. SE doesn't choose the designation, the broker does and had to decide physically to relabel those units.

What is the latest on the 22nd street lobby/second tower/theater? I was walking past the 23rd street entrance this weekend and it is kind of awful. 22nd street (particularly with that beautiful townhouse next door) would be much better -- though it doesn't seem like anything is going on there.

Wendy out!

Elliman replaces BHS at One Madison Park
http://therealdeal.com/newyork/articles/elliman-replaces-bhs-at-one-madison-park

November 23, 2009 02:00PM

One Madison Park
Not long after representing celebrity client Jude Law in leasing a Greenwich Village apartment, which ended up being visible from New York University dorms, Brown Harris Stevens has found itself in the middle of another gaffe. The firm has lost its role as exclusive broker for condominium One Madison Park, which has been attracting celebs, after two of its brokers reportedly agreed to buy units there and then flipped them for profit. Their actions, while not illegal, are considered in poor taste and perhaps even unethical, the New York Post's Jennifer Gould Keil reported. Prudential Douglas Elliman will now be representing One Madison Square Park. [Post]

Wow. I didn't even realize there was a broker there. I thought the building sold itself.

They probably weren't booted because they made a profit, but because they were the ONLY ones to make a profit.

Seriously, that can't be the real reason, can it?

Certainly the developer knew from day one he sold to them.

And developer would have to approve a flip ... No?

Feels like something else is going on here.

none of it is surprising building a total mess, everyone from original financier credit suisse, to current contractors, bankers/lenders feel that Slazer a mess, looking to borrow $100+ more million to finish adjoining tower, also iStar financials stability in question--sounds like a formula for disaster or foreclosure---and now the broker switch...........

So now we know why all of those listings are no longer available from BHS.

But what about the two that still ARE available? Specifically, the 40th and 43rd floors.

For the record, both of these units were shown as "sold to third parties" in the AG filings. So presumably they weren't part of "brokergate".

But if BHS retains the listings, is it likely that these are buyers who are just trying to get out and are sticking with Wendy? Or is there a better explanation.

For those shopping, you might be able to get a deal:

43 is a full floor unit with a terace. The current ask prices is $10M, and the contract price for the existing buyer is $8M. Think $7.5.

40 is one of the large full floor units (no terrace). The current ask is $9M (down from $9.9M), and the contract price for the existing buyer is $6.85M. Low $6's seem good.

Meanwhile Wendy is still, for more than a year, trying (or not) to unload http://www.streeteasy.com/nyc/sale/365898-coop-115-central-park-west-lincoln-square-new-york. The problem there may be the seller, though.

An even more comparable building . . . 15 Union Square West. High end building on a square . . . Wendy as broker . . . high prices, no visible sales activity.

The Prudential Elliman listings are coming up . . . and one thing is pretty suprising. They have NOT updated the condo fees. At this point, the developer is aware of the issues related to the understatement of condo fees . . . so to allow the mistake to continue in the marketing material is pretty surprising.

For example, in the $3.025M listing for the 1328 SF unit, the condo fee is listed as $868. In fact, the latest amendment -- the one where they finally fixed the condo fee -- shows the LOWEST fee for that size unit (9A) is $1,377. That's 60% higher than shown in the listing.

Similarly, the $3.55M lsting for the 1560 sf unit, the fee is listed as $1,019 -- compared to the lowest fee for this size unit (9B) as $1,588. Again, almost 60% higher.

Obviously this underlines the ethics of the developer as well,
sad this glorious bldg has such underlying bad karma, and financial uncertainty
Does anyone have a clue as to how many apts have closed?
Or how many are really in contract? Also what happens now to the apts owned by the BHS brokers now that PDE is handling OMP?
Will they be forced to close?

Interesting listings showing up.

As of today, there are 12 listings. Of those, 7 -- more than half -- are units that were shown in AG filings as already in contract. Those units are 9A, 9B, 12A, 14A, 21B, 43A and 47B.

Given that closing notices have probably been delivered on at least the first 5 units (floors 21 and below) . . . is the most logical explanation that buyers have walked from these units? Or might something else be going on?

Real estate pros, elucidate please!

One possibility is that they haven't "walked" but don't plan on closing, and the Sponsor has agreed to try to resell them and avoid litigation over the deposits if they are able to re-sell them and be made whole.

I'm not sure I see/understand a real difference between "walking" and "not planning on closing". In either case, the buyer does not close and the sponsor gets the right to resell the units -- regardless of what happens with the deposit. And in either case, there is additional inventory on the market, which isn't great for the seller.

And wouldn't any cooperation with reticent buyers indicate that the sponsor doesn't think it has a clear right to keep the deposits?

Yes, in any case there is additional inventory.
But just because the developer re-lists it doesn't mean they think they cannot keep the deposit.

The apartment would be going back on the market either way (deposit kept, deposit returned). Makes more sense to have a quick one page agreement with buyer in contract: If it sells for same, give you back your deposit. Sells for less, deposit makes the difference.

Why do that? Faster and cheaper than going through process of breaking deposit escrow. If buyer fights it the apartment is tied up and cannot be put on market and the legal costs go up.

That said, based on common charge changes alone, I think the developer is going to lose any deposit fight.

Old West, I think your analysis only makes sense if the buyer can actually "tie up" the process of reselling the unit. And in the case of this development, I don't think they can.

Once the sponser gives the buyer the closing notice and the buyer fails to close, the sponser is free to move on with his life and remarket the unit. The buyer can challenge for the deposit, but it can't restrict any sale of the unit.

If that's the case, then there is no reason for the sponsor to cooperate with a reticent buyer at all . . . unless they worked some deal on the deposit. And the sponsor wouldn't work a deal on the deposit unless it thought it might not be able to keep it.

I am fairly certain that even if a buyer fails to close, a buyer can still file suit for return of the deposit. As long as that suit remains, the developer cannot sell the apartment to someone else.

went to a party at an apartment in this building last weekend. pretty wicked view. building lobby was a mess.

My point was pretty much the same as OldWest's (thank you for picking up where I left off and running with it).

Old west and 30,

Believe me, I'd love it if you were right on this, but my understanding is
that taking an action to reclaim your deposit will not
have any impact on a sale. And that kind of makes sense. After all, your
right to the deposit stands regardless of whether the apartment is sold
or not.

Now you might be able to tie up a sale by filing a suit that somehow
asks for specific performance, but I'm not sure what that claim would be.

Again, I'd LOVE it if you were right about this, so please feel free to
give any specifics that support it.

The buyer challenges the distribution to the Sponsor of the security deposit from the escrow account. Until the deposit has cleared the escrow account, to some extent the contract is "still alive". The Sponsor can't sign a second contract on the unit while the first contract is in any way alive (well, not without having the situation signed off on by the new buyer, which isn't very likely). In NY, attorneys can do just about anything and not get disbarred....... except screw with escrow accounts.

Another apartment closed at something less than the contract price?

20B was listed in the AG documents as sold to a third party at $3.85M (with a $385K downpayment) back in 2007.

It just closed at $3.55M ($300,000 off) in a sale to an individual with a different name than the one in the Amendment.

Just because I find the asking prices so incredibly entertaining, this unit had been an active listing (despite the in contract sale) at $4.95M . . . that's almost 40% higher than the ultimate selling price.

Is it just me, or is there a pattern here?

But doesn't the new buyer reflect the logic that if they keep the 385k deposit, the resale plus the deposit bring them back to over the original 3.85 sale price? Seems like good business decision to take that offer.

Also, at about 1,800 psf for the 20th floor that bodes pretty well for all of those full floors higher up. No?

mktmaker,

I agree. The issue in this building is not some sort of crash. It's a good building, and it will end up selling out -- and likely at rates that give the developer a profit.

The only issue is how much profit. Remember the brokers have been touting a virtually sold out building, and showing listing prices from the mid $2,000's up to over $6,000 sf. And that's just plain silly.

The simple fact is that nobody is buying at anything remotely close to the rates -- and even those who bought before the listing inflation (back in 2007), are not closing at those rates.

So if you're a buyer, the question is what is the market price. My completely worthless guess is that the current value is closer to $1,700 for low floors and closer to $3,000 for the higher floors. And if they'd just stop pretending and sell a few of these, they might actually build up demand to sell the rest.

So no tears need to be shed for the developer or the building. If you want to muster some sympathy, send it to Wendy and BHS who probably invested pretty heavily in selling this and REM, only to have one tower collapse, many of the 1 Mad buyers walk, and the rug pulled out from under them once the building started to close. Karma can be tough.

And so far as the deposit goes, I'm more than a little bit sure that the developer is not keeping all of those.

Is the official building lobby on 23rd or is it on 22nd? Is the Rem tower officially called off, or on indefinite hold? I thought the lobby was to be through the Rem tower.

Regarding the lobby. The permanent lobby is/will be on 22nd street.

Regarding the Rem tower -- to be precise, it was never alive. It was never a part of the offering plan. It existed only as potential and marketing materials.

The offering plan has always had two towers. But the second tower was not the Rem. It was only about 165 feet. The Rem tower was 355 feet.

If the developer ever really wanted to build it, they would have had to change the offering plan. And if they did that, everyone would have had the chance to walk.

In fact, the closest they ever got to making a change was to send out a very strange letter asking buyers whether they would agree to the changes to the common spaces and tower based on the marketing brochure. Unorthodox, to say the least. But that was the last gasp for the tower as shown.

If they ever wanted to revive the plan, it would likely be a huge, complicated, expensive deal requiring the agreement of current buyers.

flatirony: I disagree that the developer will make a profit. When construction is late, when floor plans and plates change, it takes a huge financial toll. These guys aren't professional developers. More like the rest of the newbies who jumped into the market and will be gone see enough.

They got greedy with that Rem tower and it really messed them up big time. He delayed them further.

Saying this building will sell out is like saying the Giants will win the super bowl. Sure they will but not this year and how much suffering between now and when they finally do.

You're right that Wendy & Co were part of this mess with their conflict of interest. We should not forget that Wendy did everything with the developer's blessing. The developer agreed to allow buyers to assign contracts. Pretty much unheard of in NYC. More like a Miami type of thing and they got themselves into a Miami situation.

BTW: your definition of a good building must differ from mine. Unless you're talking specifically of construction because the financial status is a mess and will be for awhile. Even the construction could be suspect now. Developers in trouble tend to cut corners towards the end, especially newbies who don't have a brand to protect. The first three years post close are usually full of those types of issues, special assessments, lawsuits, and anguish.

I do agree it is a great location with great views. But that's it.

OldWest: Everything you say is right, but my understanding was that the original break even was reported to be around $1,700 sf. I'm guessing that on average they'll pull in mid $2,000's. That give enough room to cover up a lot of delays, etc.

And yes, every condo has financial issues in the first years -- but this is a well heeled group. I don't think its going to throw anyone into a financial tailspin. Maybe you have other information about the "financial status" being a mess . . . I just don't know it.

And when I say "good building", it's purely from a long-term investment point of view. Once things are sorted out in the first few years, the location (which will only improve), and the views (which cannot be improved) will be enough to build value in this building.

TCO

I'm curious about why the Temporary Certificate of Occupancy have only been issued for up to the 27th floor (and that was issued months ago). I would have guessed that the folks on the higher floors (which are mostly full floor units with deep pocket buyers) would be more willing to close than those on the lower floors . . . and that the developer would want to get a TCO in place so it could start doing those closings.

Yet here we are, months later, with no more TCO, few closings on the low floors, and nothing available to close higher.

Anyone got any ideas?

I'd estimate that construction overage is already in the $200/psf range - again newbies. And cost of financing has escalated as time and covenants play a role.

Throw in some extra legal, the Rem fiasco, and the distinct possibility that sales will be slow and thus closings will be even further out than envisioned and I smell a loss on equity.

Long-term investment? Well, compared to what? There are fantastic views on the north side of the park buildings too. 15 Mad North? Over-priced but again, views are views. Long-term investment is relative. But we'll re-visit in 10 years and see.

OldWest, I think you are correct that the extra time of Rem and the extremly slow pace of finishing the building/getting to closings will eat away at equity. As for the long-term view I can't compare OMP to 15 Mad North. 15 Mad North as one good view, of the park, the clock tower and, I suppose, OMP (not a beauty in and of itself). OMP looks at the Park, the Clock Tower, the Empire State building and a clear shot up Madision Ave (pretty cool at night I bet). In addition, it has river to river views (above 30) and a great view of downtown which will never be obstructed due to zoning. As btw the two buildings, OMP kills 15 Mad North. For whatever that is worth.

I agree mktmaker.

Personally, if I had $5M to $10M to spend, I'd spend it on a much larger place at 15 Mad North. But there will always be a strong market for OMP. And the fact that not only is it unique for the area, but that there aren't that many units in the building will make it more likely that pricing will remain strong.

I'm considering buying now. Why? Because I don't want to be priced out forever.

but jerkstore buying what as it is difficult to tell what is really available?
Also assuming you are paying cash as no one wants to finance this project based on number of contracts, closings and the unfinished state of the public areas, etc

Pricing is fascinating between the units brokered by BHS and Prudential.

For example, take 46B and 47B. Identical units, one floor apart.

46B is $5.5M, represented by BHS. That comes to $2,800 SF.
47B is $6.725M, represented by Prudential. One floor up, the price is over $3,400 sf.

That's a big premium for one floor.

Lower price is due to the apt. being undesirable to the Chinese...

Six

Six in Cantonese which has a similar pronunciation to that of "lok6" (落, meaning "to drop, fall, or decline") may form unlucky combinations.

Very interested in buying a full floor. Love the bldg and ammenities. Any thoughts on a good square foot price? i feel there will probably be a year of inconvenience but after that, it should be great and an appreciating asset.

you are obviously a gambling man, steelman.

Steelman, didn't we all have this conversation like 3 months ago? You wanted feedback on full floor over 30th floor I believe. 3 months later, bldg more complete and Wall Street seemingly ready to announce bonuses at or about 07 levels (w/ dollar in the tank for foreign buyers).

At least my opinion has not changed. Full floor over 30th fl figure about 2100 psf. For 45th fl to top, perhaps 2,500.

Understand Slazer has taken two additional partners, one Swiss or Austrian as closings along with cashflow
a. Big Problem ! All activity has ceased so it seems

thank you mktmaker

Steelman,

You have a lot of units to choose from. My understanding is that there are fewer than 35 units in contract -- and that INCLUDES those buyers who are trying to get out. That means that well over half of the building is available for sale. That's a lot of units to move.

When buying, pay no attention to the listings in terms of pricing or availability. The prices listed are waaaay higher than the 2007 "height of the market" contract prices (which should probably be your ceiling), and there are way more apartments available than they have listed.

Before you make an offer, you might want to:
- ask how many units are actually under contract -- and how many of those are being contested. They won't tell you and they won't make any representations about it.
- ask for a representation about the height of the south building. They won't tell you and the won't make a representations.
- check the prices on the closing units.

Happy 4 Month Anniversary!!

Yes, it's been over Four months since that first closing (August 14). A lot has happened since then . . . just not a lot of closings.

Just seemed like a moment to stop and reflect.

thank flatirony. You are right on in all your statements.

faltirony, got word from a broker friend (who heard from a friend so who knows for sure) that two more units closed yesterday, including a full floor. Said they got just shy of 2,000 psf. With the higher floors due to start more closings soon perhaps things will pick up. My skepticism still lies in their ability to close units below, say the 25th floor.

Part of what is delaying things is sponsor's obstinate attitude in refusing to renegotiate with contract holders and in just situations not releasing deposits. Heard from broker friend AG about to investigate Slazer.

Interesting about those new closings. $2,000/sf for a full floor -- even relatively low -- sounds like a good deal.

If it's true, it means market value is well below what it was two years ago (when most folks signed contracts). While that seems like common sense -- obviously the broker, the developer, and many commenters still maintain that those old prices are somehow relevant.

I guess we'll have to wait to see which floor was sold. The lowest one I see that was committed on the AG documents that hasn't closed is 24. It was in contract for $8.85M . . . at 2,723 sf, that's $3,250 a square foot.

If that was the floor (and I don't know that it is), and if the contract price was $2,000/sf (and I only know that from the above posting -- so it may not be true), then the old price would have been 60% higher than the actual sale price.

Have a friend who is attempting to get his deposit back on a high full floor.

I'm sure he is not the only one.

Interesting about the AG investigating Slazer. I don't know it to be the case -- but there certainly appears to be enough to make someone take a closer look.

They have been so afraid to just face the music on this development. I swear that if they had just realized that they made some major mistakes, and given all buyers the opportunity to opt out (or possibly renegotiate) -- they would be completing sales right and left. Granted, in the $2,000 to $3,000 sf range -- but that's where they are going to end up anyhow. They might have enen used the opportunity to do something about that second tower.

The simple truth is, people walk into those high floors, and they're smitten. I could sell these . . . heck, at these prices, I might even buy one of these!

Instead, they've cast a huge shadow over the offering. And nothing is more an enemy of high sales prices in real estate that uncertainty and doubt.

I suspect that buyers may still get this option -- the only difference will be that if the AG forces it -- it makes the developer look bad.

At the moment, it's tough for the high floor buyers with a two year old (expensive) deals, wanting to close, but knowing that the developers' errors might have given them a get-out-of-jail free card. They must decide whether to move forward with their two year old (high priced) contracts or take some risks to go after the developer, hoping to end up in a negotiation, but risking their unit (and maybe their deposit).

End of rant. All that said, I'd rate this building a "buy" at $2,000/sf!

For what its worth I think the full floor sold was not the type with the extra high ceilings and wrap around terrace (which 24 is) so the price will probalby be less that that would go for (even if a little higher up).

Could be the 15th floor, for which the 2007 price was already below $2,000 sf. I'd heard that was a custom combination -- so maybe that's it.

is this project dead in its tracks--no movement whatsovever!

Can anyone tell me a bit about The Martin Act?

a source from a wiki footnote.

http://www.dechert.com/library/FS_2004-04.pdf

Another sale. 32B. Last listing price $4.38M. Sales price $3.23M -- just over $2,000/sf for a relatively high floor. Feels like market.

The sale is to a Non-US VC/Technology guy, and it was not listed in Amendment 15 (so likely a real, recent sale). There's a mortgage too, so banks must be lending against the property.

Interesting Flatirony.

32B is one of those odd 1562 units (which are listed as two bedrooms but are basically one bedrooms). If that unit can get 2,000 psf for what i believe is a large one bedroom then the full floors should achieve much higher prices. In theory at least. Any thought on 2000 psf for that unit?

I agree about the unit -- really a big one bedroom. I THINK this unit clears all surrounding buildings -- so price increases from this level up should be less than the changes from below this unit (where some views are blocked) to here.

I'm sticking to predictions that Mid-2,000's will be the right range for the higher floors. It's high pricing for the neighborhood -- yet much lower than the 2007 pricing -- and WAAAAAAAAAAAAAY lower than the current list/ask prices.

Been digging around ACRIS and see a few common themes. Not many mortgages in the first sales -- and even some of those there are small. And lots of Non-US buyers.

That all feels right. Bring those international types looking for a primo NYC pad into town, take them up to 15 CPW and AOL/TW, show them units at $5,000+ per square foot, then swing downtown to 1 Mad Park and offer them groovy space at a great discount.

It sells itself! And I'm totally serious here -- it sells itself. And with only 70 units to sell -- the scarcity thing will kick in, and prices could take off. It will be interesting to see that tipping point.

The latest listing just makes me laugh. A full floor for $8M . . . but my favorite part of the listing on the prudential site (and I quote):

"Developer is waiving common fees for the first 6 months! "

After that I guess you're on your own in the 1 Mad Condo Fee lottery . . . could be high, could be low, could be nobody there to pay them but you!

Visit the prudential site, Web ID 1205721 for this VERY special offer.

Does anyone know what is actually going on in this bldg? Nothing has closed in a month. Is there a class action lawsuit in the works?
Who is Lau that sued sponsor? thought there was new investor--seems deadlocked.

2748, according to you the sponsor has an "obstinate attitude in refusing to renegotiate with contract holders and in just situations not releasing deposits" and that you "[h]eard from broker friend AG about to investigate Slazer."

Perhaps we should be asking you what the E True Hollywood story is about this building? Are you one of those buyers who the sponsor is refusing to renegotiate his contract with or are you in a "just situation" where you feel the sponsor should be refunding your deposit?

mktmaker

You were asking before about pricing.

A contract was signed just before the new year for a high floor -- a full floor -- with a price of about $2,000 sf. And that contract came with many conditions/requirements before the buyer would close.

Until some of the uncertainty is resolved, pricing is going to take a hit.

2748 -- Where did you find out about Lau?

Ah, found it. Anyone able to view filings? Here's the Justia link for the Lau suit. Guessing it's a deposit refund ($1M is the amount).

http://dockets.justia.com/docket/court-nysdce/case_no-1:2009cv08955/case_id-353897/

Here you go. It'll be a mess, as I'm copying from the PDF:

FACTUAL ALLEGATIONS
10. On November 17, 2008, Plaintiff loaned PMA the amount of $500,000
secured by a Promissory Note (the “November 17 Note”) requiring PMA to repay the
amount of the loan plus interest of 24% per annum. On December 12, 2008, Plaintiff
loaned PMA an additional $500,000 secured by a second Promissory Note (the
“December 12 Note”); the November 17 Note and December 12 Note shall be
collectively referred to as “the Promissory Notes”.) True and accurate copies of each of
the Promissory Notes are annexed hereto as Exhibit A.
11. Each Promissory Note provided that it was due and payable no later than
six (6) months from the respective date of its execution, and that PMA would be liable
for all costs, including reasonable attorneys’ fees, incurred by Plaintiff in enforcing any
provision thereof.
12. Contemporaneously with the execution of each Promissory Note,
Defendants Shapiro, Jacobs and Slazer each agreed, via a Personal Guaranty
(collectively, the “Personal Guaranties”), to personally guarantee the repayment of each
Promissory Note. The Personal Guaranties expressly provide that each guarantor would
be liable for all legal expenses, court costs and fees incurred by Plaintiff in enforcing the
Personal Guaranty executed by such guarantor and waived trial by jury. True and
accurate copies of each of the Personal Guaranties are attached hereto as Exhibit B.
13. Each Promissory Note was also secured by a Collateral Assignment
Agreement and Partial Assignment (collectively, the “Collateral Agreements”), of even
date therewith, executed by Defendants PMA and ISMJ in favor of Plaintiff. True and
accurate copies of the Collateral Agreements are attached hereto as Exhibit C.
14. PMA and ISMJ did, in the Collateral Agreements, partially assign to
Plaintiff their respective interests in Condominium Unit 7D located in the building known
as One Madison Park Condominium, 23 East 22nd Street, New York, New York
(hereafter, the “Premises”). The Collateral Agreements specified that, if PMA defaulted
in its obligations under either Promissory Note, Plaintiff had the right to acquire the
Premises for the sum of $1,000.00 and to thereafter dispose of them in the ordinary
course.
15. The loans provided to Defendants matured in May and June, 2009
respectively and full payment of the amounts become due and owing to Plaintiff, in
addition to interest owed under the aforementioned Notes.
16. On August 17, 2009, pursuant to its rights under the aforementioned Notes
and Guaranties, Plaintiff demanded in writing full payment of the amounts owed with
interest. A true and accurate copy of the August 17, 2009 demand directed to Defendants
is attached hereto as Exhibit D.
17. Despite written demand, Defendants have failed to pay their obligations
under the Promissory Notes and Personal Guaranties.

Hey NWT, Thanks!

In summary, the boys needed cash. They borrowed $1M at 24%, making corporate and personal guarantees and pledging an apartment.

When time came to pay, they didn't. hence the suit.

So broke they are! Now what happens? Was the Austrian investor a fabrication/
As to my interest had the building not turned into such a disaster was considering buying a hi fl apt, as I love the views--however numerous brokers cautioned me against OMP.
Hoped Slazer et al might default and someone more capable take over.
If they cannot cover a million, it is a BIG problem. Also what's up with all the outstanding contracts and previous 112 sales???????

Wow. Guess this developer is down for the count. Poor schmo who got the million dollar apt in a distrissed building that he won't be able to sell. Wish I could get 24% on my money ---- oh, I guess he didn't.

This bldg will eventually all get sold. Upper full floors at $2-2500 per foot will be a bargain in the future. There is nothing like it, beautiful finishes, great views on upper floors and great amenities. I agree it will be a tough next 1-1.5 years but after that, it should be great. The bank will never let a project like this fail, they have too much invested, and too close to completion. A new sales team, and no BS will get the job done.. The developer may not be successful in the project, but the building will be.

I agee with that steelman.

The longer the developer stays, the more likely the sales will be at $2,000. Once the developer is sacrificed and there is some clarity on the project, the prices will rise.

Not seeing how developer can hold out another 1-1,5 yrs as they have only closed on 10 apts in 5 months.
What do you think is going to unfold in terms of a scenario? How can building be completed, etc. w/o developer defaulting if he cannot cover $1M loan--makes no sense????

WOW. From "The Real Deal"

http://therealdeal.com/newyork/articles/one-madison-park-developers-face-lawsuits-over-defaults-involving-wendy-maitland-of-brown-harris-stevens-who-was-replaced-by-tamir-shemesh-of-prudential-douglas-elliman?utm_campaign

One Madison Park developers face lawsuits over defaults
Brown Harris Stevens' Wendy Maitland is one of the plaintiffs
January 12, 2010 04:00PM
By David Jones

Brown Harris Stevens agent Wendy Maitland and One Madison Park The developers of Flatiron District condominium One Madison Park are facing a flurry of lawsuits alleging they failed to pay back millions of dollars in loans and deposits to a number of high-profile investors, including Brown Harris Stevens' Wendy Maitland, the building's original listing broker, and Charles Milite, president of the Gotham City Restaurant Group.

Maitland, a senior vice president at BHS, filed suit against Park Madison Associates in New York State Supreme Court Dec. 22, alleging that Ira Shapiro, who co-developed the building with investor Marc Jacobs, asked to borrow from her $300,000 in August 2009 to help pay for unpaid mechanics liens on the property. Shapiro told Maitland that he would receive money from another source, so Maitland agreed to lend the funds if the money was repaid within 24 hours, according to the complaint.

Maitland made two $100,000 wire transfers into Shapiro's account between Aug. 19 and Aug. 20, the complaint says, and then made a third wire transfer of $100,000 to Five Star Electric, an Ozone Park-based contractor.

An official from Five Star confirmed that it was a contractor at the building, but did not have any further comment on the mechanic's liens or the case.

Maitland's attorney Noah Weissman filed several exhibits to back his claims, including e-mails and other correspondence between Shapiro and Maitland, in which the developer acknowledges the loan. Weissman declined to comment. Shapiro was not immediately available and Maitland said she could not comment on the case.

As reported by the New York Post in November, BHS was replaced by Tamir Shemesh, a managing director at Prudential Douglas Elliman, as the listing broker for One Madison Park, however there was a dispute over whether BHS was fired or resigned from the account. The New York Times reported that Maitland and her colleague Wilbur Gonzalez bought and resold apartments at One Madison Park, a process known as flipping.

Court records show that Maitland was not the only individual lender at the property.

Edward Lau, a resident of Tobyhanna, Penn., filed suit against the developers in U.S. District Court in October, alleging they failed to repay two $500,000 loans he made in November and December 2008.

He alleges that Shapiro and Jacobs agreed to personally guarantee the money and pledged condo unit 7D as collateral, according to court documents. He alleged in the suit that an agreement allowed him to buy the apartment for $1,000 if the developers failed to repay the loans, and that they did in fact fail to pay back the loans when they came due in May and June 2009.

Jacobs' attorney Lawrence McCarron said he would not comment beyond the written answer to the complaint, which says: "I think our answers speak for themselves and we're contesting many of those allegations."

In court documents, Shapiro's attorney Burton Dorfman says that the agreements are unenforceable. He declined further comment. Lawyers for Lau were not immediately available for comment.

Milite of Gotham City Restaurant Group filed suit in New York State Supreme Court Dec. 31, alleging that in October 2007, he put a 10 percent deposit to buy apartment 16A for $6 million. He said that in April 2009 the developers asked him to waive any objections to some planned design changes in the project and he agreed on the condition that he could assign the purchase contract to someone else by July 31. Furthermore, if he could not find someone to take it over, the suit says, he was told he could get his deposit refunded. He said the developers also agreed to raise the interest payments on his $600,000 deposit to 8 percent, in the court documents.

By July 31, Milite signed a second agreement with the developers to get out of his contract entirely, adding that his deposit was due back by Oct. 4, 2009. By Nov. 30, Milite filed suit against the escrow agent, Goldberg, Weprin, Finkel, Goldstein. The original deposit amount was returned following the suit, according to lawyers for Milite. Goldberg, Weprin officials were not immediately available for comment.

That apartment, a 2,700-square-foot, three-bedroom unit, was later sold in November to another couple for $5 million, according to records with the city Department of Finance.

Would you enter into a purchase contract with these people?? Seriously.

Wow. How has the AG not gotten involved yet?

From the NY Post:

Mad money

The troubled One Madison Park — a 60-story condo building that’s facing multiple lawsuits from creditors, including one of its former brokers — has some good news to report.

Technology entrepreneur/investor Yigal Lichtman closed Tuesday on a $10 million unit at One Madison, according to Prudential Douglas Elliman broker Tamir Shemesh. The four-bedroom, 4½-bathroom condo is 3,310 square feet on the 42nd floor. Shemesh, who took over sales around Thanksgiving, says another deal for a $1.5 million condo is imminent. And the developer is considering offers on 15 other units, with a combined value of around $40 million, Shemesh adds.
But the building is also wrangling with unhappy buyers who signed contracts in a better market and now want out.

Read more: http://www.nypost.com/p/news/business/realestate/residential/green_acres_EBsdqlFZcc6sk7EcXWNRlL#ixzz0caxw8kje

This sale (42) is to the original buyer (per Amendment 15).

The original price was $10.5M. It hasn't shown up in ACRIS as of this morning, but I'm assuming the article is wrong, and the price is $10.5, not $10M. If the article is right, there was a $500K reduction.

And what unit would sell for $1.5M?

Small one BR on lower floor?

Could be . . . though the smallest "regular" floorplan is 930 feet, which would make the sf price closer to $1,600. That might be right for a tiny low floor (those units have terrible layouts and no view).

And on the "15 units with a combined value of $40 Million". That doesn't sound too promising either. Not that this math means anything, but the average cost of a unit would be $2.67M. In order to just break $2,000 sf on those, the AVERAGE unit size would have to be 1,333 ft.

If you look at their listings, there are only a few units available for that size (one at 920 sf, and a few at 1,328 sf. And there arent that many very small units in the building -- listed or otherwise.

That means the rest of the sales come from units that are:

- 2 BR 1560 sf
- 3 BR 1962 sf
- full floor 2,723 sf
- full floor 3,310 sf

Well, you get the drift. It's likely that a lot of those listings are 1560 sf or more, and that brings the price/sf way down.

I get that Brokers and developers are going to throw out numbers and spin them. I just wish they'd do it in a way that actually makes their point!

But then, they don't seem to be groups that are very good at math . . .

From today's "The Real Deal"

http://therealdeal.com/newyork/articles/one-madison-park-faces-even-more-lawsuits

One Madison Park faces even more lawsuits
Ex-Yankees/Nets Chairman Harvey Schiller is one of numerous plaintiffs
January 15, 2010 11:30AM

By David Jones

One Madison Park faces legal trouble including a suit by former Yankees/Nets Chairman Harvey SchillerThe developers at One Madison Park are facing millions of dollars in additional lawsuits for alleged loan defaults and refusing to release down payments to buyers as well as a judgment for unpaid rent at the property's off-site sales office.

In November, former Yankees/Nets Chairman Harvey Schiller and his wife Marcia filed a $1.5 million fraud suit in New York State Supreme Court against the developers, Ira Shapiro and Marc Jacobs' (not the designer) who operate under the name New City, N.Y.-based Slazer Enterprises, alleging they collected multiple deposits on the same apartment to keep in good standing with lenders.

The couple alleges that it signed an agreement in July 2007 to buy apartments 45A and 45B in the building for $7.15 million, and put a 10 percent deposit into an escrow account controlled by the law firm Goldberg Weprin Finkel Goldstein.

They claim that in January 2009, the developers got another party to bid on the apartment and promised to refund the Schiller's deposit and pay them $850,000 to terminate the contract. Additionally, they allege the sponsor took a deposit on the apartment from the new purchaser, but refused to refund the money.

Schiller and his attorneys told The Real Deal that the developers have repeatedly given them a run around about whether the money would be returned.

"We've had scenarios where we thought the matter was settled, then at the 11th hour we find out it was not settled," said Debra Guzov, the attorney for the Schillers.

Earlier this month, the original deposit was returned, however no portion of the $850,000 fee was paid to the couple, Schiller told The Real Deal.

Shapiro, who is the majority owner of the company, and Jacobs have not returned repeated calls for comment. Shapiro's attorney, Burton Dorfman, was not immediately available for comment.

The developers originally borrowed $125 million from Istar Financial to develop the 23 East 22nd Street property, which was scheduled to be a 60-story high rise tower near Madison Square Park. In 2008, the developers reached an agreement with architect Rem Koolhaas to connect a 24-story building to the tower, raising some cost estimates to $300 million, but those plans were scaled back.

At least eight units have closed since October, according to Department of Finance records. The sponsor is now offering six months of free common charges for new buyers and has agreed to cover the common charges for the same period of time for buyers who have already moved in.

At least half dozen lawsuits have been filed in recent weeks by buyers seeking return of their deposits, according to court documents and interviews with local attorneys. Other cases are still being negotiated with the developers. This does not include individuals who loaned the developers money in recent months.

As The Real Deal previously reported, the developers are facing a lawsuit from Brown Harris Stevens broker Wendy Maitland, who formerly handled marketing for One Madison Park. She claims the developers failed to repay $300,000 that she loaned them to help pay for mechanics liens.

Other lawsuits include one from David Kestenbaum of Mount Vernon, N.Y. who says he loaned $1 million in January 2009 to the developers for "working capital" and that they failed to repay the loan; a Queens couple, Harvey and Linda Levine who seek a $600,000 judgment against the two developers, for allegedly borrowing the funds between November 2008 and March 2009; and a man named Gerald Cohen who alleges that he loaned the developers $500,000 for a term of 30 days and they pledged the same unit, apt 7D, as collateral for the loan, but never paid the money back.

As The Real Deal previously reported, the same apartment 7D was pledged as collateral in a loan by Edward Lau, a Tobyhanna, Pa., man who loaned $1 million to the developers in late 2008.

In another case, Green Mercer Holdings, the landlord at 27 Mercer, was awarded a judgment in November against Jacobs and Shapiro for $84,636 after they defaulted on personal guarantees for more than $80,000 in back rent.

The developers failed to pay back rent at the One Madison Park sales office between April and June of 2009. Jay Itkowitz, attorney for the landlord, declined to comment except to confirm that the judgment remains unpaid.

In addition, a Brooklyn contractor called BILT/DFI Inc. filed suit against the developers alleging almost $138,000 in unpaid fees. The firm started construction work on the One Madison Park showroom in September 2008 and was paid most of the $712,615 it was owed.

Uh, wow. I'll admit this is pretty surprising, even having followed this project for some time. I am sure I will get ridiculed by some for saying this but this might be the best chance I get for getting a good deal here. Will be a damn rough year it looks like but long-term I still have no doubt about this bldg or location. Perhaps this is sliding into my price range -- and perhaps I need to root for a little more bad press . . .

You're right mktmaker. But wait until 1 second after Slazer is dead and gone, and then buy in!

mktmaker/flatirony this building will ultimately be a winner. You have 1 rough year ahead, with or without Slazer. I think the building will pan out. The Bank will never let it slip away, they are so close to completion. They might scrap the 2nd bldg??? I have been in the building many times on upper floors and it is special, nothing like it in the area. I think if your serious about buying, ultimately you will be fine. Good deals are out there in the bldg.

My question to those of you who've been to the building and potentially are interested in buying is the following - don't you guys think that the floor plans are just terrible?

In the 1bd (for $2m ), I'm not even sure the bedroom fits in a large bed, very limited closet space and of course kitchen is non existent. In the 2bd room ($3m ), the 2nd bedorom is "convertible" and the apt just doesnt feel like a true 2bd at all and also lacks southern view, because thats where the 2nd bathroom is placed. The full floors are a diferent story of course. Any thoughts?

At least they finally returned the deposit. Screwing around with escrow is bad.

There may be some quality issues with the building since the developer ran low on funds and there were some pissed off subs but I think the biggest issue just might be that iStar isn't doing so well either. Their debt is rated at junk and they just took over some downtown project from a developer. How fast do they want to sell it and how low will the prices go?

Somehow I feel this will be much cheaper once iStar takes it over and starts the fire sale.

Steelman,

We don't disagree. A few years from now, this will be worth lots of money.

The only, only, only question is, at what price level to buy in.

You're sounding more like a broker than a buyer. So let me ask you, what do you think is the right price level? I've said low-mid $2,000's . . . though things might go a little lower in the short term.

Alex123,

The partial floors (except the three bedroom) are a horror show. Really terrible layouts. Views are great, but the space is not functional.

For example, take the largest two bedroom (1560 sf). It has this crazy sliding wall that supposedly creates the second bedroom. But if you do that, you have a room that is about 12' wide . . . and one wall is the kitchen!! It's shockingly dorm roomish. It functions best with the sliding wall open, but even thenit is a very poorly laid out one bedroom.

If anyone has seen the offering plan, they can see the original layouts which were MUCH better.

On the other end of the spectrum, the full floors are very nice, very functional.

I suspect many of the split floors will sell at a big discount, and someone will put them together for a profit. It wouldn't be that hard.

Flatirony- Definately not a broker, more like a real potential full floor buyer. I agree with your pricing $2-2.5 per foot. It won't go lower for the full floors. They just closed one for $3000 per foot.
The problem is the 1-2 years of issues there will be going forward. What is going to happen to the lobby and new bldg/ When will the ammenity floor be ready? I don't think it will be done by 7/1 like they promise. My strong feeling is it will special, just have to be patient.

flatirony, steelman, mktmaker - given everything that we know about the building at this point, where do you folks think pricing will ultimately shake out for non full floor units, particularly those above 30th floor?

It seems to me there is a great distinction between truly unique $6-12 mil nicely laid out full floor units and the rest which is luxurious apartments, but with very very questionable layouts.

Do you think its closer to ~$2k/sq ft when all said and done or closer to $1.5k? What do you see as the biggest risk as it relates to pricing at this point (beyond the general macro, NYC real estate, wall st comp, etc)? Specifically, do you think to the extent that developer is replaced, would that create incremental softness in pricing, or, to the contrary will it be viewed as a positive?

All conjecture of course but here is my take. It very much depends on what a particular buyer is looking for. For example, the "questionable layouts" as you call them may or may not be an impediment; all depends on who they are appealing to. Let's take, for example, the 1560 "2 bdr" that has been the cause of much derision. I do not see it as a 2 bdr. I view it as an excellent layout with great views for that particular buyer with big bucks who will utilize it as a wonderful 1 bdr. Perhaps close off that odd alcove in the LR to make a home office, who knows. The question is how many of those layouts are for sale and how many big spenders are out there who want it as a 2nd or 3rd apt. Clearly it is not for someone looking for a practical best bang for their buck 2 bdr. I think the 930 sq ft one bedrooms above 30 are pretty awesome with some of the best views in NY, and I think they will retain their value. I love the 1962 layout (again if used as a 2 bdr).

Basically, I see the apts above 30 that are not full floor holding a solid 2k psf, going up accordingly the closer you get to the top. I agree with flatirony that if you can buy two apts on a floor and combine them the sum of the parts will outweigh the individual units after a combination.

I think that typically you would expect softening in pricing if the developer is replaced by the lender, however, in this bldg w/ this developer I am not sure it would matter much. Anyone buying here has money and likely realizes the long-term value of the purchase. About the only thing I feel confident in with this product and location is that whatever someone pays today, they will be very happy in 3-5 years, without exception.

I agree with everything you say mktmaker. Well, almost.

I think the small units are a bit more problematic. I'm not sure whether you've been in them, but even when you open up the sliding wall, the 1560 doesn't fall into the category of a 'wonderful one bedroom'. The living area is just plain awkward. And then you have that "wall kitchen", which does not work as a luxury anything. And that same wall of appliances is featured in the other small units. It's just plain strange to be expected to live (even for a few weekends a year) in 12 feet between your refrigerator and a wall of glass.

And even though I think there's a big market for these as pied a terre's -- $4M for a 1 BR starts making 15CPW and TWC look good again :)

All that said, I agree with $2K sf above 30. Below 30, I think you'll start seeing several sub $2K deals for the partial floors -- and just over $2K for the full floors.

flatirony, I have actually been in all of the layouts so I have my own view on how I would personally make it work (subjective of course as that is). I would take out the sliding wall (which not only enhances the look of the unit but adds a little over a foot to your L/R's width. I would wall off that home office and in doing so create a nice D/R area w/ pretty cool views. In the L/R area you would then have room for a full couch, coffee table and love seats, with a another sitting area by the curtain wall for a couple of club chairs or something. Lots of options (and I'm no interior designer). I agree that the kitchen stinks (if you are a big cook) but they are certainly functional for what most of us non-family types need. If you have a couple of kids i doubt you are looking at these units (non-full floor) anyway. Alas, beyond my price range (for now) but doesn't stop me from doing a little dreaming. . .

Time will reveal all.

mktmaker --

If you have the offering plan -- you can see the original layout for those 1560's. It's significantly better and makes the space much more usable (and is close to what you describe and how I would do the place). It's a shame that they didn't move forward with those layouts.

But the kitchen in the narrow spaces stinks regardless of whether you are a cook or not. You literally have appliances as one wall of a narrow room. It's college dormy.

The original plans at least had wood panel doors that could be pulled out to hide the kitchen when it wasn't in use (turning it into a wooden wall). I'd heard at one point that those were eliminated, and at another, that they were back in the plans. Do you know whether they are in or not?

flatirony, was not aware of the wood wall concept, however, I don't tkink I would want that. My problem with the kitchen is its functionality, not so much its look. I would probably keep the paneling open and then have a bunched up wall of wood on my hand (not attractive). What I really wish they figured out how to do is to put an ilsand in but that would have further challenged the L/R layout and might have interfered with the view a bit. All in all, the reason to buy or not buy here, in my opinion, is not he kitchen.

The kitchen had "pockets" on each side, so the walls folded up and stowed away neatly when you wanted to have the kitchen open. It was the one feature that made the narrow room halfway workable.

I don't contend that the kitchen is a reason to buy or not. The only discussion is pricing. And yes, a bad layout (as in a living room that is little more than a hallway with exposed kitchen appliances on one wall with no way to open the room) affects pricing. That's all.

At least the 1560 2 BR and the 3BR you can change the layout. The smaller units, there isn't a lot of opportunity. You're kind of stuck with bad space . . . yes, a great view, but bad space.

High, full floor for $5M????

52 is a full floor (3,310). A $5M sale would mean $1,500/sf.

That either sounds low (as in unbelievable, fire sale low), or there is something else going on.

Amendment 16 shows this as a sale for $10M, on a contract dated 10/30/2007.

The ACRIS documents show a different party purchasing, and a different contract date.

As always -- please enlighten me if I'm missing something here.

Best guess is a recording mistake. That or some other consideration that does not show up in the recording. I'm pretty sure that if I walked in there today and offered 5M for a high full floor they would laugh at me, though I might give it a shot. . .

Not if you offer cash.