Disaster at the Rushmore

i would echo your comments. Without regard to the the politics, etc of the decision, with the WSH right there, RSB never really had a chance. Add to that the length of the walk to B'way, the bitter, bitter winter wind, I never understood why people chose to live there much less placed a premium on it. With each subsequent building upping the ante, it became incomprehensible.

I think with some planning (i.e. not make a big wall of towers), they could have made it a more enticing walk to the Hudson. You wouldn't feel the wind so much if it weren't tower after tower.

no doubt that the buildings are way too big...not completely sure but i think that ground level is lower in the sixties than in the seventies, eighties, nineties. also, you're considerably closer to the river there. all in all, i agree with you that more planning for the human aspects of day to day living would have been a geat benefit.

From my experience the community has benefited from the Riverside South development. We have an amazing park and prior to the first building going up the area was nothing more than a Hooverville with Freedom place a popular taxi stop for hookers. The biggest source of negative comments typically come from residents of Lincoln Center Coop who unfortunately lost their river views.

which community benefited?

I disagree. The community has benefited. Before the development you had the ugly dirty rail yards. Now you have, IMHO, attractive (not beautiful) highrises, albeit all very similar. The room sizes, amount of glazing, amenities really ok. These perks obviously were done to bring people that far west. Yeah I know, the highway is loud, but you have the park at your feet and river views, and from the high floors on the other side of the buildings good views east, south and north. The prices are a bit out of wack. And since they have these highrises, at least Freedom Place is cleaned up from the hookers. If you want to talk about ugly buildings, look next door to Lincoln Towers(but again ok prices, big rooms, and best of all, parking spots you can buy.)

what do you disagree with? i still don't understand what community benefited. as far as i can recall, there was no community there.

This whole thing about "beautiful buildings" puzzles me. I look around and 99% of what I see would not qualify. Form follows finance. Developers have an obligation to shareholders to maximize profits and it seems apparent that buyers are not placing the same priority to outside architecture as their non-buyer critics.

Oh and the community is the upper west side who visit the piers instead of the mole people who used to live under 72nd street overpass.

the beauty issue in and of itself is a bit overdone these days. because of the land bubble developers felt compelled to create "special" architectural buildings that often wound up being mediocre, although some were quite nice by the development standards of the last 30 or so years. riversider is right, developers generally have not had much incentive in Manhattan to develop "beautiful" buildings. I don't really want to get into it, but it is the structure of the Manhattan market that encourages bubble-time development, which only promotes real quality at the really high end (and often not even there).

but functionality is another thing. the problem with a development such as the rushmore, which had no significant infrastructure surrounding it, is that it depended on itself (and the other nearby developments) to generate the infrastructure. kind of an if you build it, the rest will come approach. that approach might have seemed feasible when the land was first bought, but as time went on it was clear that only banks and drug stores were willing to go where nobody had gone before, at least initially and at these retail rates. you can't attract small, local type businesses until after the people arrive. the businesses can't afford the lead time. and now, only time will tell. something will happen with these properties, and there may be opportunity found in lower retail rents for enterprising businesses.

but, you won't be able to do anything about the wind tunnel effect. as i always say, it sucks in the winter, but is glorious in the summer.

Every building's brouchure is pretty much the same, might as well have check marks
* Miele, Subzero, Bosche, appliance
* River views
* 10 foot ceilings
* fill in the blank store

I think I just described a number of buildings on the west side....
It's amazing how little the product has changed(parks views amenities), except the price.
Now about that rabbit....

If Winston Churchill were a rabbit, that would be he in the morning.

To take off on aboutready's post, I'm actually very surprised that Trump didn't give away the retail space for free or next to nothing for five years just to take some of the risk away from the small business owner and attract the needed retail. The developers are still owning it and making the big money on the residential portion. The commercial is always a long term investment. The Trump retail on Freedom Place has been vacant for years. Probably could make more on the residential if the retail were there. This concept is especially true in Riverside because Trump originally did the whole thing not just one building.

Equity Residential owns the rental buildings...

Yes they do, but Trump and his investment group originally did and they sold out to Extell who sold the rental buildings to Equity Res.

Well, about Jane Jacobs and neighborhood development, real estate, in NYC anyway, probably requires a 10-15 year time horizon. I remember the Upper West Side when there were hot and cold running prostitutes on the corner of 82nd & Broadway, when there were NO restaurants open after 8p because (1) people did not venture out after that hour (2) there were no restaurants to speak of, only diners, luncheonettes (remember those?), and the Automat on 72md Street. But even then two developments pointed to the future: Lincoln Center for the Performing Arts and the Upper West Side Renewal Project, the first to really combine renovation, preservation, new construction with protections (Mitchell-Lama) for moderate income families. The thinking among investors at the time went something like this: You've got Broadway and Lincoln Center to the south, Columbia U and CCNY to the north and a relatively narrow band of blocks between two potentially wonderful parks (recall no one walked through central park lightly, and the unfortunate homeless used the kiddy sand boxes in playgrounds as cess pools). So the location had great potential and now the city was stepping in to remove, renovate and finance as necessary. So the Upper West Side slowly, gradually, inevitably got yuppified, and when the co-op craze of the 80's took hold, things went into hyperdrive. The area between Lincoln Center and 72nd Street, now called Lincoln Square, was another vacuum and we all can see the towers that sprouted there in the last 10-15 years. So you can either believe that Riverside Blvd has no future or that it is a new neighborhood in the making and that in 10-15 years will be part of the fabric of Manhattan. I think the developers responded to the market in several ways -- condos, instead of co-ops, more 3 bedroom units for larger families and, yes, amenities ranging from swimming pools and morning coffee to shuttle buses to the nearest express subway. Just a little perspective...

You left out Plato's retreat in the Ansonia. I'll leave out the youtube link highlighting the cheesy commercial.

http://www.israelidiamond.co.il/News.aspx?boneID=985&objID=8333

Plato's retreat in the ansonia...gee, vaguely remember it but those were the days when it certainly would have happened. Needle Park? SRO's? Another thing that made the West Side unique, sort of, was back in the late '60s the 20 police pct was designated an experimental precinct, one of the first to get enclosed motor scooters -- only the original idea was to extend the reach and range of foot patrolmen. Of course, that idea has evolved to a better parking ticket delivery system. It sure has changed in the last 20-30 years.

Could not help notice that a buyer has now placed a unit on market "at cost". Of course this doesn't include transaction costs(broker fee?). Since this person will not make any make return on investment you have to wonder if they felt a large obligation to close or was pressured by the developer. Of course they could be hoping their loss is less than the 15% deposit they originally placed....

http://www.prudentialelliman.com/Listings.aspx?ListingID=813267

Riversider, presumably, this buyer went into contract with the developer in 2006 or 2007. I did the same. Those prices have depreciated by approximately 15 to 20% at least. So his cost is still inflated in today's market. People who are now going in to look at condos in the Rushmore are seeing a 20% discount immediately.

http://video.google.com/videoplay?docid=-5254959847439461850&ei=KVEqSpLqGJH6rALrjqSrCg&q=avenue+q&hl=en

Bds, so you are saying that the below listing is still overpriced by about 20% at least? That would be below 1k/sqft. I still think it is overpriced. 700/sqft is about right...based on the current economy and inventory

http://www.prudentialelliman.com/Listings.aspx?ListingID=813267

Problem is and always has been you can't justify this as an investment. Let's assume the following represents fair rent
http://www.nestseekers.com/20227/Rushmore

$ rent 3800
maint. (787)
r.e tax (34)
leaves you $3000

which can support a mortgage of approximately $550,000 assuming 30 year level pay.

Of course one should project a 10% increase in common charges as the 787 was projected
based on two year old+ assumptions. Assume a $150 increase in r.e. tax in two years due to
mini tax expiration. etc etc..I could go on...

Just read this entire thread. Am curious -- how long will the taxes be abated at the Rushmore?

421A tax abatements run 10 years, going up 20% every two years.

Riversider -- Are you a buyer at the Rushmore? I don't see that one bedroom on the link you provided, just two penthouse units for $12.9 and $6.8, respectively, brokered by Ilan Bracha. (I did a search for 80 Riverside Blvd. and two rentals also came up).

Riversider -- Are you a buyer at the Rushmore?
combination of Acris & NestSeekers.

Does anyone know, or better, provide a link to that part of the acris or city site that shows things like permits and temporary certificates of occupancy?

http://www.nyc.gov/html/dob/html/home/home.shtml

Anyone notice that 40 Riverside Blvd will have 500+ units. I assume rental.

Community Board 7 has given their input into a draft scope of work for a supplemental environmental impact statement of the Riverside South development project by Extell. Currently Extell wants to increase the footprint of their project and the increase will exceed limits of the 1992 Restrictive Declaration Density Limitation, I guess a local ordinance. The letter is authored by the chairperson of CB7 and the co-chairperson of the Riverside South Task Force and was submitted in mid-January 2009 to the city's planning commission. There's a lot of good information about the development, buildings, proposed services in the area. Thought it may be of interest to anyone considering buying in Riverside Boulevard:
http://www.nyc.gov/html/mancb7/downloads/pdf/priority_issue_scope.pdf

Here's an October 2008 summary of Riverside South development projects from and defines the area of sites L, M and N which is referred to in the above pdf:
http://www.nyc.gov/html/mancb7/downloads/pdf/rss_main_page.pdf

What I learned -- that there is discussion about Metro-North stations at West 61st and 125th Streets as part of the East Side Access project. Also learned about the possibility of a tunnel in the area for a future enclosed highway, and I didn't know that highway in front of Riverside Blvd. is also known as Miller Highway.

emmapup -- Thank you for posting the CB7 response and the October 2008 memo. I had heard long ago about the possible burying of the west side highway but that Congressman Gerald Nadler vetoed all plans because he thought it would serve too few people, given the huge costs. And I also had heard the Extell, as part of its agreement, basically built an underground lane and a half of the highway running along Riverside Blvd to 72nd Street but again, it would take the city, state and feds to all agree to build the rest of it, dismantle the overhead highway, and regrade it as a park...so it became something of an urban legend, like alligators in the NYC sewer system. Of course, while CB7 can suggest Extell be required to build much of the rest of the highway in exchange for modifying the restrictive declaration, (1) CB7 can only urge, support, or oppose but has no statutory authority to require, impose or restrict anything and (2) Extell has to be persuaded that its more aggressive expansion plans make enough economic sense for them to expend additional monies on a road. If one restricts Extell's plans for the reasons in the CB7 response, then, presumably, it removes any incentive for Extell to agree to work on the covered roadway. So which would CB7 prefer -- the expanded Extell plan AND burying the highway, thus opening about 12 blocks of riverfront park or refusing the expansion? It would be unrealistic to expect both, or nearly all of CB7's objections to be met, if any. Remember, Extell can still build a huge project, just not as huge. Also, from the Columbia U. plans, I knew about a metro north stop at 125th St. but not one at 61 St.

Riversider -- I had heard that 40 Riveside would in fact be condos, but that was a few months ago and, as we all agree, the world has changed. So that may be out of date...

Bearish stance by Extell, but silver liniing is less competition for resales finally. They'll have their hand full selling Rsuhmore & Aldyn whichi is going up fast.

must disagree Riversider... 500 rentals are DIRECT competition for re-sales... it's like when BMW/MB hugely subsidized its "lease" program at the cost of "sales" and ended up getting their asses handed to them both ways... I.e. their "off lease" deals are killing their used car sales and new car sales....

500 rentals are DIRECT competition for re-sales

weak.. Yes make rent cheap enough some people might switch to renting, but a cheaper condo next door is more of a threat. Probably can be explained with a curve or ratio which changes over time. Plus these are going to be small units that will have limited impact to big two bedrooms and above.

Riversider... I once did a comparison for my wife on 1965 GM... where I showed her, I could rent 4 separate units in the apartments in the same building and net net, would've been cheaper than buying 1 3 bdrm unit.... BTW the 4 separate units would've been 2.5x the size of the "purchase " comp.... thats' how crazy it was and is still is (I think it's down to 3 units now LMAO)...

we won't convince each other. I might be tempted to switch from bmw to mercedez for the right savings even though i prefer bmw, but no way i'm going hyundai regardless.... but some people might...

i don't think he's referring to mb competing with bmw but their leases competing with their own sales.

i don't think he's referring to mb competing with bmw but their leases competing
The product will not be comparable.. Either based on square footage or amenities

you are correct SIR, CC.. that was weird with all the aliases floating around.... :)

amazing building and location... Just took a run there and along the water... They are adding more open green and park space. construction seems to be moving along for the parks on the Hudson River. Even at $1,600 - $1,700 psf in prices, if you are able to get unobstructed water views then I think this is well worth it... Only major negative is that you would have to live in a building that is going to have a neighboring building be in construction for another year or two... I prefer smaller boutique building but this is a quality area and building for sure!

which firm do you work for? go away and stay away.

WOW.. that broker can count to 5... givez her/him a break columbiacounty :)

12345street doesn't know what he is talking about. The Park is NOT moving along - I talked to the parks engineer earlier in the week where they have come to bulldoze the land in front of 140/120 Riverside Blvd, they said that ALL they are doing is flattening the land and putting grass over it. They are NOT making it into a usable park and have no idea when the Parks Commission actually plan on doing it. Clearly 12345Street works for Corcoran Sunshine specifically in the Rushmore sales office - a few names of sales people come to mind - what a pathetic attempt.

Anyone going to the open houses tomorrow?

r u kidding me... I'll be the one munching on a TUB of popcorn with mini-snickers on the side....

Actually,seeing that once-grassy area bulldozed last week made me wonder if Extell isn't planning to just BUILD MORE APARTMENTS in FRONT of the Riverside Blvd. ones! Who's to stop them?

Oh, and speaking of sights.... the other day I saw a couple moving in to the Rushmore. Yeah, just the two of them, with a Ryder truck, moving their own mattresses and stuff. Kind of a strange sight to see in front of a building selling studios for a million bucks.

First closings only happened a few months ago(well past sept 08), Why hasn't an updated budget been prepared? Is this not required? How come nobody objected?

Believe me there are many objections to the info coming from the developer of this bldg. What do you mean by an updated budget?

http://www.nytimes.com/2009/07/26/realestate/26deal1.html?ref=realestate

This article is pretty biased towards the developer. Just look at the title. Why isn't it "Fine print to the rescue" or "A contract is a contract". A lot of buyers are in a tough position these days, all have lost a significant amount of their assets, many have lost jobs. Developers have done no favors for these people, and have enforced very onerous plans that clearly favor them in every respect. Are we supposed to feel bad that they are losing some of their profits after years of making millions of dollars? Buyers are just fighting to keep their hard earned money.

For once a contract favors the buyers and they shouldn't get that right?

Well, if you look at it from a longer term perspective, what is it that those who sued really want: Do they want out or do they want a better price? Unfortunately, this nasty economy has hurt a lot of people, some of whom really can no longer afford the Rushmore. They need out, and as the developer can't get blood from a stone, Extel ought to suck it up and work out a deal whereby those who really are in trouble do not lose their deposits. For those who resent signing at the height of the market but still, bottom line, want to live in the buidling, it's more complicated and less clear-cut. It doesn't help in either case that the developer is rumored to be offering new buyers hefty discounts -- but many of the nice exposures and higher floors are in contract. So, if you salivated for a river-view, high floor apartment, there are definitely fewer on the market. One can argue that those who signed up early got a better choice of apartments. So what will Extel do if the lawsuit succeeeds, and they have to eat some tens of millions of dollars? I expect Strook is checking the fine print on their malpractice insurance.

those who wish to buy in an extell building should make sure they consider what happened in one of extell's buildings in Miami. 40% of the building sold and closed, and they put the remaining units on the market at 50% off. granted that market is in worse shape, and i don' know what, if any, concessions they gave to those in contract to get them to close, but if they didn't offer much knowing that they were going to do fire sale prices after those in contract closed, some people got truly hosed.

Area is prime real estate. I can't see a fire sale to the public. Extell would privately negotiate with a vulture buyer and offload units in bulk or bring in a private buyer(who knows maybe Donald). Either way, I can't see a sale in the NY Times advertsing River views for $700 a square foot any time soon.

aboutready-which building in Miami did they build that you are referring to?

http://www.nytimes.com/2009/07/29/business/29miami.html?partner=rss&emc=rss

Offloading Rushmore apts in bulk might be difficult. Commercial RE has many headaches to unfold in the next 2 yrs. Trump has 6 gargantuan new hi rises in Miami that are virtually vacant. He probably isn't on the hook for all of them because he basically franchised his name, but when the banks are left holding the bag for a lot of those white elephants (soon) the law suits will fly for Trump and others.

Last year, there were at least a dozen talking heads on CNBC saying buy Miami RE because it was trading in bulk at 30 cents on the dollar and couldn't possibly go lower. But it did go lower. An apartment complex in the very tony Bal Harbor area which sold two years ago for $1100 psf, last week sold 51 apts to a bulk buyer for $61 psf. A bit lower than 30 cents. So never say prices can't go down.

Miami is a very different market but the players and the hedge funds are the same and there will be reverberations here.

http://www.nytimes.com/1992/12/06/realestate/postings-3-lincoln-center-japanese-take-title-to-312-condos.html?scp=6&sq=%22three%20lincoln%20center%22&st=cse

he apartment tower called 3 Lincoln Center is certainly in the right place, overlooking the complex from which it takes it name.

But just as certainly, it came at the wrong time. Sales began in 1989, as demand for luxury condominium apartments was plummeting. Only 23 dwellings were sold.

Now a group of Japanese lenders headed by the Sumitomo Trust and Banking Company's New York branch has taken title to the 312 unsold apartments in the 45-story tower at Amsterdam Avenue and 66th Street, settling a $137.5 million outstanding construction loan.

a hedge fund or vulture fund taking on 100 apartments is not that impossible..

Riversider: that article is from 1992 when the Japanese had money and were still buying in manhattan. that is obviously no longer the case.

my last post was in response to your suggestion of Trump which doesn't seem likely to me ( though what the hell do I know, the Donald and I don't really converse). I know it is possible that vulture funds could buy up bulk in rushmore. But the big money let Related and Extell (and others) twist in the wind for years in Miami. Patience certainly paid off as a tactic in that market. Why wouldn't they do the same here. It is going to be interesting to see how it plays out. But if Extell busts out here after their debacle in Miami what is their future and who would be willing to bail them out. Why would you buy in that building now when the developer is facing such heat. Shades of the Apthorp.

http://curbed.com/archives/2009/01/09/buildingchopper_half_off_at_20_pine_when_you_buy_80_units.php

The Distress Sale. We've received the details of a bulk 20 Pine sale floated to investors by a group called Venture Capital Properties. The details: 80 unsold units for $63.7 million, or a jaw-droppingly low price of $652 per square-foot. Ouch. Like our daddies always told us: Debt is a scorned woman that must be satisfied.

r.s., selling them in a bulk sale to an investor is even worse for the owners than the units being sold on the market at the same price. if they're sold to an investor you don't have a chance in hell, at least in the near term, of selling to anyone who needs a mortgage. with a bulk sale you get the fire sale prices and the inability to move your unit.

A.R.
No comment on whether bulk sale is good or bad for individual investors. My only point is if the sponsor becomes distressed this is a likely outcome. Any idea how long it is likely to take for the A.G. to decide on the typo? Extell and it's lenders cannot be happy about the current cash flow situation.

and so it begins. watching this stuff minute by minute makes it seem like its taking a long time but we're still less than a year from lehman and arguably less than 6 months from when some people started to see that nyc re was neither different nor immune.

http://www.youtube.com/watch?v=-hQel3noQeI

What's the secret max?
.....
For me it's going to Rushmore

"Riversider: that article is from 1992 when the Japanese had money and were still buying in manhattan. that is obviously no longer the case."

No (except for the part about Japanese not being buyers today). The article describes foreclosure by Japanese banks that were the construction lenders to the project, not a voluntary, opportunistic acquisition of distressed assets. Taking over the project was about getting back some fraction of the old money, not putting in new money. Anyway, by 1992 the days when Japanese investors had money to throw at everything in sight were over; they were in the third year of their domestic stock and real estate market meltdown by that point and New York, where they had both bought and lent heavily in the '80's, was nearing the bottom of its own real estate downturn.

http://www.observer.com/2009/real-estate/20-pine-conniption?page=all

I don't think the bulk sale ever happened. Even though I remember that at the time (Jan.) even the NYTimes picked it up. They denied it when I went to 20 Pine in Feb and this Observer article is from April 2009 -- which states that the 80 apts are still there and still could be a bulk sale but the co-developer said it would not be at the price the Venture offered.

"We've received the details of a bulk 20 Pine sale floated to investors by a group called Venture Capital Properties. The details: 80 unsold units for $63.7 million, or a jaw-droppingly low price of $652 per square-foot."

My jaw, for one, is not dropping. When we look back on this a few years from now, I bet the $652 psf will look closer to right than the $1,266 psf "current market value" cited elsewhere in the article.

There are no bad apartments only bad prices to change a popular wall street euphemism..
For the right price and terms private equity is there. There's enough money for the right ROI.

rs: hilarious rushmore you tube posting. i think the secret is rushmore too. a legend in its time

aboutready - I think you overstate how a developer selling his final units at 50% off "screws" those who have already bought in the building. 1st point is that the developer himself is screwed too - he obviously doesn't want to sell at those prices either. But really all these "fire sales" as you call them do is let people know where the market is. It's the market that has screwed the people not the developer. The owners are just getting a dose of reality. It's hard to admit that your condo is worth 50% less than you paid, but if a developer has to sell 40 units at 50% off prices then it's pretty clear that that is all they are worth.

not necessarily...developer has a different set of economics (both good and bad)---can easily overshoot on the downside to get their business back in gear.

The owners are just getting a dose of reality. It's hard to admit that your condo is worth 50% less than you paid, but if a developer has to sell 40 units at 50% off prices then it's pretty clear that that is all they are worth.

Speaks to liquidity. The price a developer would get if he sold every unit today is different than what if sold in individual transactions over two years. This is analogous to trying to execute a Sell order on a stock at several times average daily volume and a big reason why large blocks of stock are sold below last trade.

yes, but i don't think those 20 Pine apts sold at bulk: From april 2009 observer:

And yet 20 Pine has those 80 units left, and only one of its nine penthouses has sold. A second, according to Shvo’s regional sales director, Marc Palermo, is in contract. One source said a bulk deal could still happen, though the price would have to be much higher than those Venture Capital numbers. Africa Israel contemplated holding a one-day sale next month with discounts somewhere between 10 and 50 percent, though that sale will likely be put off.

doesn't mean there will not be many bulk sales in manhattan in the coming years. but i don't think the 20 pine happened. ........yet.

columbia and riversider - I understand your points (but disagree that large blocks of stock sell at a discount, in fact, they can sell at a premium - just depends on the market) - thus my first sentence that aboutready's stance "overstates" how a developer can screw owners. Certainly dumping units on the market affects prices but the truth is there are so many units out there that no one developer can be accused of dumping anything. Units today are basically trading for their value not some big discount to their real value.

When the AIG building sold in FiDi for $100/ft - was that a fire sale by a bank or was it indicative of what buildings are worth today? All of the buyers got to see it and bid on it - unfortunately for owners of FiDi commercial space that trade was a wake up call as to the real value of their buildings today (and unfortunately it was a wake up call to mezz lenders who realize their loans are worthless).

my only point is that if a developer needs to clear a balance sheet based on bank covenants or other outside considerations, it is possible that they will sell at a discount to the "market" because of time constraints. i don't think they are necessarily trying to screw anyone but nevertheless, if you're a single unit owner in that situation, you are screwed.

cc - agreed

Carlyle is probably not in it for the long term. At some point their patience wears thin. Same thing for creditors. At the right time, if they are not getting paid , they will weigh the virtues of a distressed bulk sale. I say bulk because you have more control over the terms(having negotiated them with one instead of multiple parties).

This of course is still hypothetical. We do not know how the A.G. will rule or if parties will settle.

i had heard that the AG was punting various issues back to the courts, declining to rule on various issues. anyone have a better sense of whether the AG will rule on this?

jazzman, for the last few years the developers carefully timed release of properties to maximize profit, as is of course their right. it is also their right to sell for pennies, or to have the llc declare bankruptcy, but just like the slow release of properties affected prices unnaturally to the upside, the opposite will obviously affect prices to the downside in a distorted manner. in effect, they are creating the new market price. i'm certain other developers are none too happy in such a situation as well.

If this AG takes forever to rule, doesn't this hurt both the developer and the purchaser?

bds... only if the market continues to sink lower... so yes it hurts developer/purchase option holders... but it's not like we are withholding cancer treatment for a minor... two greedy parties smoked crack and used no condoms... now we await the HIV test results...

Personally, this is our "great" system a work. The stupidity stems from both parties utter lack of acceptance of their own actions and figuring a net net best outcome before a lawsuit...

Finally, I'd say yes to CC/AR/JM/Riversider... the banks/sponsors are taking a portfolio approach to all this and plenty of bankers are in fatigue mode from all the firedrills related to waivers, extensions and hopelessness of their situation. I am almost certain all debt classes are in the work-out department and won't be long until some action is taken, most likely awaiting AG/legal opinion.

Portfolio => what is best % recovery from par ($1.00) and good luck if this loan has been marked "impaired" cause the banks will turn ruthless and try to screw all involved. Banks are senior secured and driving this thing into the ground if that'll mean they'll recover more sooner.

I think that this is a pretty tough situation for everyone. Hypo, the lender, is in a bad spot here. It's loan is either in default (perhaps it has even matured) or is about to be in default (missed sales covenant perhaps, interest reserve is almost certainly running low if it hasn't already run out). There have been far fewer sales than Hypo expected at this point. A screw up in the condo docs may affect the relatively few outstanding contracts that there are (incidently, I'm sure that Hypo and Carlyle pissed at their counsel for missing the date issue too. They certainly had to give the condo docs the once over after Stroock floated drafts. Wouldn't want to be on the deal teams at KS or STB right now). But what options does Hypo have? Look at how AREA and Anglo have bent over backwards on the Ansonia project. They don't want to take over the project unless they have to. What do they get? A stalled condo project that can't be sold for the amount of the debt. I agree that Hypo will try to do something at some point, but I don't expect any real enforcement of remedies by them for some time unless the sponsor craps out on them. I see Hypo extending the loan to try to give the sponsor more time so long as Extell/Carlyle are willing to kick in $ for debt service and operating expenses.

Sponsor makes it's profit on say the last 15% +-5 of units sold. They've closed on just over 1 or 2 dozen units. They still owe money.

If this AG takes forever to rule, doesn't this hurt both the developer and the purchaser?

Yes. It makes for a Zombie Condo

When the sponsor fails....
http://www.crainsnewyork.com/article/20090805/FREE/908059978
Real estate developer Kent Swig’s disastrous foray into residential real estate will reach a major milestone Thursday, when he and his partners are slated to relinquish control of the huge Sheffield57 project. The 597-unit apartment building on West 57th Street had been in the process of being renovated as condominiums, in one of the largest such conversions in city history.

Riversider - what happens now?

they auction off the apartments - presumably in large chunks to investors, but then who finishes the "shoddy construction"?

will these eventually be sold at below market prices?

very interesting article. could be many more of these coming soon.

I assume we are talking about Sheffield. The apartments are sold at the price that maximizes return to the new party including the cost of finishing construction.

Rushmore buyers offered deals to stem mass defections, sources say

October 23, 2009 06:30PM
By David Jones

The sponsors of Extell Development's Rushmore condominium have quietly begun offering sales discounts of up to 25 percent in a campaign to retain at least some of the 30-plus buyers looking to back out of their contracts, according to multiple sources.

A group of at least 34 buyers filed complaints with Attorney General Andrew Cuomo's office, looking to get out of their contracts. And sources said that representatives of the Carlyle Group, which is Extell's partner in the Rushmore, at 80 Riverside Boulevard, have contacted individual members of the group regarding discounts. Carlyle officials were not immediately available for comment, but Gary Barnett, Extell's president, denied that any discounts were being offered.

"It's not true," said Barnett, in an e-mailed statement to The Real Deal. "These rumors are being spread by an attorney with an axe to grind."

Barnett did not elaborate on which attorney he was referring to, or how he knew about any specific claims.

As The Real Deal reported earlier this month, a JPMorgan Chase executive filed suit against the sponsors, looking to back out of a $6.9 million contract for two apartments.

Prices in the building range from $925,000 for a 775-square-foot one-bedroom to $13.25 million for a 7,200-square-foot, eight-bedroom penthouse. The penthouse price includes a $1 million discount from the original asking price, according to Streeteasy.com.

Extell has been scrambling to close sales at the 289-unit building. The company, which developed the Rushmore with financial backing from the Carlyle Group, began signing contacts in 2007 and was originally scheduled to begin closings by September 2008.

According to published reports, the September 2008 date was an error made by attorneys for the sponsor, and the actual closing date was not supposed to be until September 2009.

Real estate attorney Lisa Urban said a couple she originally represented in its Rushmore deals, is part of the group of buyers trying to get out of their contracts. She cited construction delays and the collapse in the real estate market as the main reasons for her clients wanting to get out of their deals.

"For my particular clients it was market issues more than anything else," Urban recalled. "It took so long to complete the project at that point."

http://therealdeal.com/newyork/articles/rushmore-buyers-offered-deals-to-stem-mass-defections-sources-say-of-the-extell-development

This condo is so overrated. Walked through 6G. It felt clautrophobic.

Beautiful building, The issue is not quality,service or amenities, it's price.

I count 56 apts closed at the Rushmore on SE. And, 59 in contract, of which at least 36 are being contested. (I am counting both apts of the 35th person to file suit -- don't know if there are more of the 34 people to file a complaint with AG are buying more than one apt).

Can we count on SE's figures as being accurate" If so, 56 closed apts and 23 in clear contract out of 289 apts is a very shaky proposition. And then, what about the Alywyn? If the Carlyle's patience with Mr. Barnett is beginning to fray -- as this story suggests-- then NY real estate will have quite the bumpy ride since Barnett controls millions of sq ft of Manhattan real estate. Fasten your seat belts.

And why would anyone in their right mind buy at the Rushmore until this suit is settled. Clearly prices are going to go down here.

maybe if they threw in a brand new HAL with every apartment?

cc: that really made me laugh. but yes, call the concierge to run your HAL for you. Afterall, they must have quite a bit of time on their hands after servicing all 56 apts.

Extell is probably in a better position on Aldyn. Started being built after market softened. Assume labor and materials cost them less. Considering the gym amenities, it sounds like its being marketed to a younger set as well(read smaller units, lower price)

And don't forget the money they will save when they cut corners

That's the thing about Rushmore that as a buyer would upset me. The building, lobby and apt's look very nice, but it seems they removed a jacuzzi in the gym from the plan, and there are some that believe they promised doormen at two entrances, although sponsor usually doesn't fully staff the building until a certain threshold of buyers moves in..

riversider: "Started being built after market softened. Assume labor and materials cost them less."

are you kidding? how much do you think that materials have gone down? note: follow up question--what are you basing this on? are there not unions involved in the labor? have they announced hourly wage cuts?

did the cost of the land go down? did the cost of the financing go down?

hurry, back to the tubes!

The sales staff absolutely promised doormen at both entrances when I went to see it. And if you have to wait until a certain threshold of buyers moves in, well, it will probably go down in the annals of history as a sad tale of this recession " Long breadlines for the unemployed doormen".