P. Diddy sues landlord at Fifth Ave. flagship

475 Fifth Avenue and P. Diddy (Building photo source: PropertyShark)

P. Diddy is suing the landlord at his flagship clothing store, Sean John, at 475 Fifth Avenue for $2.5 million (see suit document via TMZ after the jump). The suit alleges the landlord, 475 Fifth 09 LLC, never removed scaffolding which was erected in August 2006, leaving customers unable to view the storefront and costing P. Diddy $5 million in lost revenues at the once-bustling store. Christian Casey, the company which runs P. Diddy’s clothing line, said revenues at the flagship store have been cut in half because of the scaffolding and want the lease rescinded for an alleged breach of contract. Barclays Capital took back the building from developers Westbrook Partners and Joseph Moinian earlier this year. [TMZ] and [Courthouse News Service]

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U.S. hotel industry reports multiple declines

The U.S. hotel industry has finished off 2009 on a sour note, posting declines in occupancy rates, average daily rates, and revenue per available room for the week ending Dec. 26, according to data from Smith Travel Research. In year-over-year measurements, occupancy fell 5.4 to 33.8 percent, average daily rate slipped 8 percent to $85.78, and revenue per available room, or revpar, for the week dropped 13 percent to finish the year at 29 percent. New York posted the second largest average daily rate decrease nationally, falling 15 percent to $198.92. In Florida, Orlando and Tampa-St. Petersburg were two of five markets to post revpar decreases that exceeded 16 percent, falling 18.3 percent and 18.1 percent, respectively. TRD

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U.S. hotel industry reports multiple declines

The
U.S. hotel industry has finished off 2009 on a sour note, posting
declines in occupancy rates, average daily rates, and revenue per
available room for the week ending Dec. 26, according to data from
Smith Travel Research. In year-over-year measurements, occupancy fell
5.4 to 33.8 percent, average daily rate slipped 8 percent to $85.78,
and revenue per available room, or revpar, for the week dropped 13
percent to finish the year at 29 percent. New York posted the second
largest average daily rate decrease nationally, falling 15 percent to
$198.92. In Florida, Orlando and Tampa-St. Petersburg were two of five
markets to post revpar decreases that exceeded 16 percent, falling 18.3
percent and 18.1 percent, respectively. TRD

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In many markets, it may be time to buy

While some contend that the new year will bring continued declines in home prices, Wall Street Journal reporter Brett Arends said he believes that now is the time to buy. “There’s always people saying things are going to get worse… I’m not predicting that things will turn around tomorrow or next week,” Arends told the Wall Street Journal. “However, the simple reality is… real estate is cheap.” By looking at data over the last four decades on house prices, mortgage rates and average earnings, Arends said, current home prices are comparatively inexpensive. It’s not all blue skies though: New York and other high-price markets still require caution, Arends said. Amir Korangy, publisher of The Real Deal, told CNBC yesterday that buyers shouldn’t feel the need to rush because home prices are unlikely to dramatically increase in the near future.

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Major multi-family landlord sues HPD over Section 8 increases

From left: Heritage on Fifth, 420 East 102nd Street, 1890-1894 Lexington Avenue, and 1982-1990 Lexington Avenue (Photo source for last three images: Property Shark)

One of the largest operators of affordable multi-family housing in Upper Manhattan and the boroughs is suing the city’s Department of Housing Preservation and Development for at least $4 million for lost income tied to deferred rent increases in subsidized housing vouchers at three apartment complexes in East Harlem. New Jersey-based Urban American Management, through its affiliate Putnam Holding, claims that the city agency breached a contract by delaying approval of rent increases for a special class of Section 8 subsidized housing vouchers in the three complexes. In addition, the petition filed in New York State Supreme Court Monday claims HPD bowed to pressure from the U.S. Department of Housing and Urban Development and revoked approved rent increases that were between 3 and 23 percent to the apartments with tenants holding enhanced Section 8 vouchers at the three complexes.

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“Fire sale” at 30 Lincoln Plaza prompts lawsuit against Milstein

30 Lincoln Plaza and Howard Milstein

A group of tenants at Milstein family condominium conversion 30 Lincoln Plaza has filed a lawsuit against the sponsor and the attorney general, claiming a “fire sale” of units in the building resulted in an “egregious miscarriage of justice” against tenants. Facing a December 2008 deadline for the offering plan to be declared effective, Milstein slashed prices for non-tenants, selling units for 40 to 60 percent less than the prices tenants had paid, according to the suit, filed Dec. 21 in New York State Supreme Court. The suit, which reveals the “vastly reduced prices” of units in the building (see accompanying chart after the jump), offers a glimpse into the challenges faced by developers after the financial crisis of 2008. The suit claims that the condo offering plan “unlawfully discriminated” against tenants and failed to adequately disclose certain material risk factors, and that declaring the plan effective was “erroneous” and “an abuse of the attorney general’s discretion.” In the suit, tenants asked that the attorney general rescind the approval of the amendment that declared the plan effective. The suit was filed by tenants Vera Salnikova and Scott Petepiece, and an unspecified number of members of the 30 Lincoln Plaza Ad Hoc Tenants Committee.

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Demolition of Deutsche Bank building may miss latest deadline

Since the city approved the demolition of the Deutsche Bank building two months ago, workers have only deconstructed two floors from the remaining 26 stories, raising doubts that the demolition will meet its latest deadline set for the end of 2010. If the demolition is not complete by then, it would cause further delays at other construction projects at the World Trade Center site. Officials at the Lower Manhattan Development Corp. said they are pushing the contractor, Bovis Lend Lease, to safely speed up work at the 130 Liberty Street project, but a timetable has not yet been set for completion. The building’s demolition, which was initially expected to occur by 2005, has faced numerous delays, as the expected costs for the deconstruction have steadily climbed.

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Stuy Town to open up vacant units to new tenants

Stuyvesant Town could see dozens of new tenants in the new year, according to a statement released today from a spokesperson from Tishman Speyer. About 100 vacant apartments at the residential rental complex will be available for rent beginning Jan. 4 and will be assigned to current rent-stabilized tenants as well as those who have sat on the development’s waiting list. These new tenants will have similar contracts to those who already live in rent-stabilized units, according to the written statement. “As is the case with current residents, each new resident will be afforded the rights of automatic lease renewal and succession rights available to rent-stabilized tenants,” the statement read. The move comes after a New York State Court of Appeals ruled in October that Tishman Speyer did not have the right to deregulate rent-stabilized apartments in Stuyvesant Town and Peter Cooper Village. The management company has seen its reserve fund dwindle in recent months and in our August issue, The Real Deal named Tishman’s purchase of the housing development one of the worst deals made since the credit crunch. TRD

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Do you think the residential market has bottomed out given the rise in contract activity but falling prices?

The Real Deal is looking for your feedback on market-related issues. Please comment below. This question was sent by Sofia Kim, head of research at Streeteasy. If you have questions you’d like posted, please e-mail news@therealdeal.com.

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New REITs to target New York City in 2010

From left, Nicholas Schorsch, CEO of American Realty Capital, and David Fick, managing director of Stifel Nicolaus

A handful of new “blank check” real estate investment trusts seeking to raise billions of dollars from investors in the public markets starting in early 2010 are targeting New York City properties, according to their recent filings. Six public REITs filed prospectuses with the U.S. Securities and Exchange Commission over the last two months to raise nearly $4 billion for the acquisition of different types of real estate in limited regions including New York. They are expected to begin the offerings in early 2010. What makes this batch of public REITs unusual from traditional public offerings, experts said, is that they are so-called “blank check” or “blind pool” entities, meaning the new company does not yet own any assets, but instead is seeking to raise capital based on the reputation of the managers and the offering plan. David Fick, managing director of equity research at St. Louis investment firm Stifel Nicolaus, estimated there were about 20 blind pool REITs nationally, which were evidence of a completely new trend.

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Panel finishes hearings on Ground Zero

A three-judge arbitration panel has finished hearings on whether the Port Authority of New York and New Jersey has met its financial obligations to developer Larry Silverstein, who plans to build three towers at Ground Zero, Crain’s reported today. The two parties have been in a deadlock since this summer, with the Port Authority offering to fund one tower and Silverstein contending that the agency should financially back two of the towers. One of Silverstein’s towers, and a fourth tower for the site that the Port Authority is building, is already under construction. The panel’s decision is expected to come in early 2010. While the panel cannot necessarily rectify the dispute, experts contend that its call could bring the two warring parties back to the negotiating table.

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New requirements aimed at helping borrowers shop around for home loans to take effect

The U.S. government is hoping that Americans taking out home loans in the new year will have a better sense of what they’ll ultimately be paying and whether their lender is offering them the best deal in town. Beginning tomorrow, new federal rules will require mortgage lenders and brokers to issue standard three-page Good Faith Estimates that combine all fees they control into one number: an “origination charge.” The newly standardized format is intended to help eliminate the confusion created by varying rates, points, fees and other terms typically scattered throughout loan documents, which can make it difficult for borrowers to compare the total costs between lenders and shop around for the best deal. Regulations mandate that lenders provide consumer with the estimates within three days of receiving a loan application, and they will not be allowed to increase their origination fee afterward. The Department of Housing and Urban Development estimates that the new rules will save consumers $700 on average because they will be better informed.

[WSJ]

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Ratner must raise another $325M for Barclays Center by next year

A rendering of the Barclays Center and Bruce Ratner

Developer Bruce Ratner has closed on his controversial Atlantic Yards project, and the site has been readied for construction, but there is yet another hurdle for him to clear before the project can become a reality, public documents show. Ratner must raise $324.8 million within a year for the new Barclays Center, or be forced to refund the $511 million in tax-free bonds that have been sold to finance the project. The funds, referred to in the documents as the “additional rent amount,” must be deposited by Dec. 17, 2010. Forest City Ratner “expects to raise sufficient funds,” and signs point to that being a practical goal. Russian billionaire Mikhail Prokhorov is planning to pony up $200 million for an 80 percent stake in the Nets and a 45 percent stake in their new arena. Prokhorov has also agreed to cover at least $60 million in losses by the team until construction on the Barclays Center is complete. A Forest City Ratner executive recently said that the developer expects to contribute another $200 million in equity to the project. [NYO]

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Ratner must raise another $324.8M for Barclays Center by next year

Developer Bruce Ratner has closed on his controversial Atlantic Yards project, and the site has been readied for construction, but there is yet another hurdle for him to clear before the project can become a reality, public documents show. Ratner must raise $324.8 million within a year for the new Barclays Center, or be forced to refund the $511 million in tax-free bonds that have been sold to finance the project. The funds, referred to in the documents as the “additional rent amount,” must be deposited by Dec. 17, 2010. Forest City Ratner “expects to raise sufficient funds,” and signs point to that being a practical goal. Russian billionaire Mikhail Prokhorov is planning to pony up $200 million for an 80 percent stake in the Nets and a 45 percent stake in their new arena. Prokhorov has also agreed to fund at least $60 million in losses by the team until construction on the Barclay Center is complete. A Forest City Ratner executive recently said that the developer expects to contribute another $200 million in equity to the project, though the source was unclear. [NYO]

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A new waterfront park for Jamaica Bay

A vacant Jamaica Bay property once intended for new single-family homes is now set to become a public waterfront park instead. Hudson Companies had planned to break ground on 20 homes next year on the 1.2-acre property, which is located along Beach 88 Street near the Cross Bay Bridge. Although the company had no debt on the property, according to owner Alan Ball, he said the rationale for selling was to “cut bait and move on.” The Trust for Public Land, a national non-profit group, purchased the land for $1.925 million with funding from the Port Authority of New York and New Jersey and donated it to the city. Hudson said the price was more than $1 million less than its market value. Environmental advocates say new parkland is a much-needed addition to the area, which they say has be overdeveloped. “Any park of any size is welcome… every piece of open land has been developed in the Rockaways in the past 10 years,” said Don Riepe, director of the Northeast chapter of the American Littoral Society, an environmental group that focuses on beaches. Construction on the park, which will offer picnicking, fishing and boating, is slated to begin in the Spring. [NYDN]

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Top state housing official resigns … and more

1. The reality of eminent domain after last week’s court filing by the state to acquire Atlantic Yards property [NYO]
2. Famous Gowanus wall not actually a remnant of original Dodgers stadium, historians say [NYDN]
3. Top state housing official resigns [Crain's]
4. Taxpayers have majority stake in GMAC after $3.8B government bailout [Bloomberg]
5. City court allows family’s lawsuit over apartment building barbecue fire to proceed [Habitat Mag]
6. Renderings of architects’ “dream interventions” at the Guggenheim [Curbed]
7. At year’s close, commercial real estate industry hopes for a better 2010 but fears a repeat of 2009 [CoStar]
8. Housing crisis stands to cost taxpayers much more with uncapped Fannie and Freddie credit limits [AP via Housing Chronicle]
9. FDIC will seek stakes in failed bank buyers [Bloomberg via BusinessWeek]

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