Full Article

NEW RESIDENTIAL
DEVELOPMENTS
Page 18
Vol 2, No.3
THE REAL DEAL
www.therealdeal.net
NEW YORK REAL ESTATE
MARCH 2004
Sotheby’s
sells out
S
FOXTONS NEW MONEY
SAVER: NO CEO
$100 million
Cendant buys Sotheby’s (includes
offices throughout the U.S.)
2004
$71.8 million
Prudential Long Island Realty
buys Douglas Elliman
2003
$71 million
Insignia buys Douglas Elliman
1997
$70 million
NRT (a unit of Cendant) buys
the Corcoran Group
2001
Legendary real estate attorney
Sandy Lindenbaum in his Midtown office
Laying Down the Law
Seven top attorneys who shape the city’s skyline
W
hen Bruce Ratner recently decided he wanted to build an arena in
Brooklyn, he called on Stephen Lefkowitz. When Larry
Silverstein set out to buy the World Trade Center, he got in touch with
Leonard Boxer.
They are not the big names you usually hear about in New York real
estate, but they are the ones that get the big projects done.
They are New York City’s top real estate lawyers, and their sometimes
arcane craft has helped shape and reshape the city skyline time and
time again. The Real Deal looks at the city’s top real estate attorneys
in this month’s issue.
Take Sandy Lindenbaum, considered by many to be the finest land
use practitioner in the state. When Donald Trump wanted to find out
how high he could build on a property on the East Side next to the
United Nations, he went to the legendary lawyer, whose father had
worked for Trump’s father.
“I represented Donald since he was in short pants,” said Lindenbaum,
though the two have had a falling out in recent years.
For the project, Lindenbaum calculated air-rights transfers, plaza
bonuses and other zoning-code magic – and told Trump he could build
the largest residential tower in the world, 90 stories tall, which later
became Trump World Tower.
When Larry Silverstein bought the World Trade Center for for $3.2
Cabbie’s climb to buy 11 Madison
In difficult real estate career, Tamir Sapir pieces together big holdings
STUART W. ELLIOTT
F
rom the small electronics
store he owned many years
ago on the western side of Madison Square Park, Russian immigrant Tamir Sapir could look up
and see the 30-story art deco
building at 11 Madison Avenue.
It would have never occurred to
him that one day he would buy
the building for $675 million.
The 2.2 million square foot office tower, an icon of the Midtown
South skyline, was home to Credit
Suisse First Boston, and existed
in what must have seemed like a
far away and rarified world for the
1
The CEO of Foxtons looks to
be out of a job. Glenn Cohen,
head of the discount brokerage that has drawn criticism
from Manhattan firms for its
approach, has apparently left
the company after a flap over a
Foxtons commercial that aired
as a mock news story on TV.
Others said Cohen left over issues with employees, including possible overtime rules
violations.
See FOXTONS P3
“FAST FASHION”
FIGHTS ON FIFTH
Take a look at Fifth Avenue in
the low 50s, and it’s easy to
see the growth of European
“cheap chic” or “fast fashion”
in New York. In 2000, H&M –
the Ikea of fashion for young
women – opened a 35,000
square foot flagship store on
Fifth Avenue at 51st Street.
Recently, Mexx moved in and
Zara is next, and the stores
are competing throughout the
rest of the city.
See FASHION P21
See LAWYERS P14
former cab driver.
That was before Sapir, a 55-yearold with a strong accent, got involved in Manhattan real estate a
dozen years ago.
He emerged on the real estate
scene in the early 1990s, with cash
from an electronics shop that catered to Russian buyers, and which
he parlayed into multi-million dollar oil contracts in Russia. He
started small in Manhattan – investing only $2.3 million but incredibly snatching up a 20-story building in his first purchase at 80 John
Street, a deal done in the depths of
the recession of the early 90s.
Last year, in the second-largest building sale of 2003, Sapir
bought 11 Madison in the midst
of a red hot investment sales
market. The sale was second
only to Harry Macklowe’s
record breaking purchase of the
General Motors Building for
$1.4 billion.
Sapir’s short and dramatic
climb in the world of Manhattan real estate – he has assembled a portfolio of seven
See SAPIR P20
THE REAL DEAL
MARCH 2004
TRD11.p65
See SOTHEBY’S P23
Michael Toolan
Highest Prices Paid for
NYC Brokerages
Cendant will license the
Sotheby’s name for 50 years,
with an additional 50-year
option. The deal also includes
Sotheby’s 175-agency affiliate
network.
Sotheby’s has two offices
and 115 agents in Manhattan.
“It’s a wonderful name, and
it’s a good thing for Cendant
to buy them,” said Hall
Willkie, president of Brown
Harris Stevens, who said he
thought the $100 million price
tag “seemed reasonable.”
“These things sell for
three, five or seven times income, and here you are getting 15 offices, an affiliate network, and the name,” he said.
“I think it’s a good deal and
a good buy,” said Andrew
Heiberger, CEO of Citi Habitats. “It’s very clean, and
more high-end than the
Corcoran name.”
Growth seems to be the
order of the day going forward, with Cendant planning
to expand Sotheby’s beyond
its
existing
markets.
Sotheby’s has a stake in the
expansion because it will receive royalties based on new
franchises.
Bill Ruprecht, president
and chief executive of
Sotheby’s, said the goal was
$3.00
AT A GLANCE
STUART W. ELLIOTT
ome compared it to Macy’s
buying Bergdorf Goodman.
Others in Manhattan residential real estate wondered
why Sotheby’s, the prestigious
auctioneer, would sell the rights to
its name to the highest bidder.
But nearly all said that
Cendant’s agreement to buy
Sotheby’s U.S. real estate brokerage for $100 million was a
good move for the expanding
national conglomerate which
owns Corcoran and the Sunshine Group and looks intent
on gobbling up even more of
Manhattan.
It was the highest price paid
for a Manhattan residential
firm, though a comparison of
earlier deals must take into account that Sotheby’s has 15 offices around the country, including
Beverly
Hills,
Southampton and San Francisco.
The previous Manhattan
record was Dottie Herman’s
purchase of Douglas Elliman for
$71.8 million last year. Insignia
bought the firm six years earlier
for $71 million, and Barbara
Corcoran sold her firm for
around $70 million three years
ago.
The deal adds a very highend business to a national company with little experience running luxury brands. Under the
$100 million agreement,
F a c t
Of the 5,303 units of new development placed on the market last
year, 4,566 were rentals and 739
were condos. Page 8
6/25/2004, 3:54 PM
REALTY GOES
TO REALITY TV
Some New York City brokers
are getting their shot on the
small screen, as the reality TV
craze has spread to real estate.
Cable television shows like
“Double Agents” and “House
Hunters” have been popping
up, giving viewers the chance
to see agents and homebuyers
search for the perfect home.
While the bulk of the shows
are shot in Los Angeles, several have been filmed in New
York.
See REALITY TV P3
NYC Real Estate Power Attorneys
Continued from cover
billion in 2001, six weeks before Sept. 11, Leonard
Boxer headed up a team of 19 attorneys working on
the deal, some at Silverstein’s bedside, after the
developer was hit by a car five days before final bids
were due.
“Without him, the deal wouldn’t have happened,”
said Silverstein of Boxer. “With him, it did. He was
totally focused on the deal in an excruciating time
framework.”
When MetroTech and the Atlantic Center were
built in Brooklyn by Forest City Ratner, Ratner called
on Stephen Lefkowitz to do the land use work, and
now is calling on him again for the Nets project.
James Stuckey, director of commercial and residential development for Forest City Ratner, called
Lefkowitz “brilliant.”
“He has a way of simplifying the most complex
issues we confront in our business,” Stuckey said. “It
permits us to take on projects that others would
normally avoid.”
What else makes for a top real estate lawyer?
Jonathan Mechanic, often viewed as the top leasing
lawyer in New York, said one of the key qualities is a
good sense for business.
“You can bring up all the arcane points you want,
but it’s about what is a sensible resolution of things,”
he said. “Having spent time on the business side, I
have a sense of what all the parties to a transaction
are looking for.”
“Lawyers are seen either as a deal makers or deal
Leonard Boxer
Partner, Chairman of Real Estate Practice
STROOCK & STROOCK & LAVAN
A
Stephen Lefkowitz
Partner
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
I
f the Jets stadium is completed on the far West
Side of Manhattan and a Nets arena gets built in
Brooklyn, it will be partly thanks to Stephen
Lefkowitz.
The Fried Frank lawyer represents the New York
Jets and Forest City Ratner in their respective projects,
both of which look likely to transform parts of the city
pegged for development in the next decade.
“I think Stephen is the top lawyer in his field,” said
James Stuckey, director of commercial and residential
Stephen Lefkowitz
development for Forest City Ratner. “He’s a great
sounding board, and brilliant.”
Work on the Jets project started a year and a half ago, when planning began.
Juggling both assignments, Lefkowitz said, “it’s been pretty active.” But the longterm nature of the projects means the work “ebbs and flows. These things take
some years to develop,” he said.
Benjamin Needell
Partner, Head of Real Estate Practice
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
B
enjamin Needell and his firm seemed
to have a hand in much of the major
development work in Manhattan in 2003.
Known for both his quiet demeanor
and confrontational style, depending on
who is asked, Needell’s work last year
read like a laundry list of developments
planned or underway in the city.
“Clearly the biggest deal we did this
year was representing Bank of
America,” said Needell. The firm
advised the bank in signing a 1.1 million
square foot lease to be the anchor
tenant in Douglas Durst’s planned $1
Benjamin Needell
billion Times Square Tower, which many
hope will serve as a cornerstone deal to turn the sluggish office leasing market
around.
Needell, who is known as a legendary rainmaker, was singled out in one survey of
lawyers for his “hard-nosed, rather confrontational style.”
Peter Riguardi, president of Jones Lang LaSalle, who worked with Needell on the
Bank of America deal, characterized Needell as “quiet, but carrying a big stick.”
“Ben has great depth to his personality and lifestyle, which makes him
interesting and pleasurable to work with,” said Riguardi. “He is a no-nonsense
professional who is extremely bright and thorough.”
In other projects this past year, Needell and his firm represented Apollo
Real Estate Investment Fund in the Time Warner Center project, investor ING
in the New York Times headquarters project, and advised Madison Square
Garden in its search for a new home.
Needell’s firm also continued to represent Larry Silverstein in the
developer’s rebuild of 7 World Trade Center.
Three years ago, the firm worked on the other side of the fence, representing the
Port Authority when Silverstein bought the Trade Center for $3.2 billion.
Skadden Arps has 40 real estate attorneys who work in the firm’s New York
offices, according to Needell.
THE REAL DEAL
Page 14
TRD11.p65
Another project that Lefkowitz worked on, that recently came to fruition,
was the Time Warner Center, which opened last month. (Of course he was
there for the opening gala, he said.) Lefkowitz represented Time Warner in the
development of the 2.8 million square foot project, which was started in 1999.
Farther back, Lefkowitz worked to find a new home for the Mercantile
Exchange downtown, represented the stock exchange in its unsuccessful
quest for a new home, and has done a lot of work for Douglas Durst, and,
even farther back, Bill Zeckendorf, among countless other projects.
When Lefkowitz joined Fried Frank last year from Pillsbury Winthrop, it was
considered a coup. He came to the firm “because it is the most interesting real estate
practice in the city.”
Lefkowitz also served as an associate law professor at Columbia University and has
worked in city and state government, including as special assistant counsel to
Governor Nelson Rockefeller and for the state’s Urban Development Corporation.
Michael Toolan
court battle with the Twin Towers’ insurers
is Larry Silverstein’s main legal priority
right now, but the focus of the Ground Zero
rebuild will eventually shift to real estate law
when development draws closer.
For that task, one of Silverstein’s key lawyers
will likely be Leonard Boxer, whom the developer
also counts as a friend.
Boxer was the real estate lawyer when
Silverstein bought the World Trade Center in
2001, in “one of the great real estate stories
ever,” the lawyer says. Silverstein was hit by a
Leonard Boxer
car just days before bids were due, but the deal
was completed. Six weeks later the Trade Center was destroyed on Sept. 11.
“We had to be there for him while he was recuperating,” Boxer said. “He was in
the hospital under an assumed name so nobody would know.”
Silverstein called Boxer, “a great negotiator and unique in that he’s also a good
businessman, too.”
Boxer also took part in the biggest lease deal in Manhattan in 2003, representing
HIP as the insurer took 486,000 square feet at 55 Water Street. Another recent
triumph he “had his fingerprints all over,” Boxer said, was the development and financing of
the Bear Stearns Building at 383 Madison Avenue, which opened two years ago.
With 45 lawyers, Boxer’s group ranks among the largest real estate practices in the city.
Though most highly noted for its development work, “we encompass every
dimension you would need in the real estate world,” said Boxer, who came to the firm 16
years ago. A smaller firm, by contrast, wouldn’t have enough deals to support such a
multi-faceted operation, he said. “You’ve got to keep people busy,” Boxer said.
breakers,” he said. “I’m a deal maker.”
Some top lawyers thrive be being specialists, while
others are generalists.
Lindenbaum has achieved prominence by honing in
on city zoning laws, as part of what he calls “a provincial type of business.”
Joseph Shenker, another top real estate lawyer who is
more focused on capital markets, values being a
generalist.
“When I speak to an incoming classes of lawyers, I
tell them a good or great lawyer doesn’t blank out when
another real estate topic comes up that’s not their job,”
he said. “They should be broad-based, and able to
provide wise advice on any topic.”
14
MARCH 2004
6/25/2004, 3:54 PM
Joseph Shenker
Partner, Coordinator of Commercial Real Estate practice
SULLIVAN & CROMWELL
S
P
rior to working for Fried Frank,
Jonathan Mechanic was general
counsel and a managing director of
Howard Ronson’s HRO International,
which was responsible for developing
Jonathan Mechanic
more than 2.5 million square feet of office
space in Manhattan. He left the company in 1987, after working there for seven
years.
As the most notable leasing lawyer in New York, Mechanic said it is this
experience in business that gives him his edge.
“Having spent time on the business side, I have a sense of what all the parties
to a transaction are looking for,” he said.
His former boss, and friend, agrees. “He has experienced first-hand both sides
of the fence, the owner’s side and lawyer’s side,” said Howard Ronson. “It makes
Jon one of the few all-round expert players.”
Mechanic’s relationship with the brokerage community is a good one, he said.
“Seeing me on transactions, I get enthusiasm from brokers,” he said. A recent
survey of lawyers also pointed out that Mechanic is known as a man who “does
not suffer fools gladly.”
In terms of deals, ask Mechanic for his biggest in 2003, and he’ll tell you,
“Where do we start?”
Mechanic was involved in advising 55 Water Street in the largest lease deal of
the year, when HIP took 486,000 square feet in the building. He was also involved
in the New York City Teachers Retirement System’s deal to take space in the same
building, did work in connection with the AP moving into 450 West 33rd Street,
played a part in the acquisition and recapitalization of 237 Park Avenue and
advised Tishman Speyer in its acquisition of the Lipstick Building at
885 Third Avenue, to name a few.
Fried Frank’s real estate practice, which includes around 35 lawyers working in
New York, is considered to possess a broad group of excellent attorneys. In
addition to Stephen Lefkowitz (see profile on opposite page), Joshua Mermelstein
is a top performer. Mermelstein advised Brookfield in a recent deal in which
PricewaterhouseCoopers signed on for a long-term sublease for 800,000 square
feet of space at 300 Madison Avenue, a building developed by Brookfield.
Michael Toolan
henker is a slightly different breed than
other top real estate lawyers on this list
because he is more focused on capital
markets and not working in the “dirt” as
much as some colleagues who focus on
development and leasing.
In a recent lawyers survey, Shenker was
called “a big picture guy” who commentators said was “one of the best brains in New
York” — appropriate assets given the
magnitude of the deals he’s worked on.
“Our practice fits in with our firm’s Wall Streetbased practice,” said Shenker. “We do some
development and leases, but only large ones.”
Shenker is currently representing
Goldman Sachs in a joint venture looking to
Joseph Shenker
acquire Canary Wharf, the 14 million square
foot office property in London, which started as a private project, is now public,
and might go private again. He is also working for Goldman in its plans for a new
headquarters in downtown Manhattan.
The record-breaking sale of the G.M building last year also involved Shenker,
who advised the Soros Funds in a deal to provide $250 million in equity financing
to buyer Harry Macklowe. He also had a role in advising Canada’s largest
commercial property owner in selling its U.S. REIT last year, worked on behalf of
Vornado since 1983, has regularly represented the Tisch family, and advised
Whitehall Funds on its $1.85 billion sale of Rockefeller Center.
Perhaps not surprising given his capital markets slant, Shenker sees three big
trends in commercial real estate in recent years. One is the continuing shift of real
estate from private to public ownership, another is the growth of private equity
ownership funds like Whitehall, and third is the prevalence of commercial
mortgage-backed securities, and a corresponding explosion in mezzanine debt
over the last five to eight years.
There are around 30 real estate lawyers working in Sullivan & Cromwell’s New
York office. The lawyers are part of the firm’s general practice, rather than forming
a separate department, in order to foster a “broad-based focus,” said Shenker. “We
want to be an adviser with a wide range of knowledge that we can bring to clients.”
Jonathan Mechanic
Partner, Chairman of the Real Estate
Department
FRIED, FRANK, HARRIS, SHRIVER &
J ACOBSON
Samuel Lindenbaum
Of Counsel, Land Use Group
KRAMER LEVIN NAFTALIS & FRANKEL
W
hen he switched to Kramer Levin Naftalis & Frankel from his old firm
Rosenman & Colin two years ago, Sandy Lindenbaum got a higher-floor
office with an even better view of the East Side than his former digs – and the
skyline he’s played a big role in shaping.
“Look around, and I’ve had a hand in almost everything,” Lindenbaum said,
looking out the window of his corner office on Third Avenue in the 50s. “Most
of them are my babies.”
Lindenbaum has spent four decades as an attorney, and is considered by
many the top land use lawyer in the city. He was practically raised in the
profession by his father, Abraham (Bunny) Lindenbaum, whose first retainer
came from Fred C. Trump. Perhaps it’s appropriate that one of Sandy’s biggest
coups ever came for Donald Trump in 1999, when he won a city permit for the
developer to build the tallest residential tower in the world next to the United
Nations.
Sitting behind an immaculate desk (only three binders containing the city’s
zoning laws - his “bible”– are neatly stacked there), Lindenbaum says he has
been working on a number of major projects this year, even if there are fewer
“discreet, smaller projects.”
Some of the big ones involve Columbia University’s plans to create a new 17acre campus north of 125th Street, which could involve three million square feet
of buildings, Lindenbaum said. He is also working on a three million square foot
office and back-office space project in Long Island City, for a developer he can’t
name, as well as doing work on the former Con Ed site on the East Side for
developer Sheldon Solow.
Two years ago, Lindenbaum’s seven-member land use unit jumped to Kramer
Levin because his old firm merged with a Chicago firm, and there were cultural
differences. Lindenbaum said he’s happy with his new firm.
The lawyer is hard-pressed to name his favorite project ever, because, as he
says, developers have been known to call up and say “what about my project?”
But among those that were the most challenging, he mentions Park Avenue
Plaza, a Fisher Brothers project completed in the early 1990s. The building
ended up with a FAR (floor-area-ratio) of 31 – a very high number – thanks to
Lindenbaum’s efforts. Developer Howard Ronson’s project at 1 Financial Plaza,
which was completed in the early 1980s, was also great a challenge, involving
street closings, landmark issues and a host of other hurdles. “It involved every
type of city action imaginable,” Lindenbaum said.
“I
’ve been asked about being interviewed at different times over the years,
but I’ve declined,” said Marty Edelman, one of the top real estate attorneys
in the city, during a brief conversation with a reporter recently. Edelman acknowledges that he doesn’t want to tamper with his formula for success so far.
“Maybe I’m superstitious,” he said.
It’s a formula that has worked. Edelman has spent more than 30 years focused
on real estate and corporate law, doing pioneering work on financial structures
such as participating mortgages and institutional and international joint ventures.
He’s put together deals on his own, too. Without any brokers involved,
Edelman earlier this year reportedly put together a $425 million deal in which
Paramount contracted to buy 1540 Broadway from Bertelsmann.
In recent years, Edelman advised on a $600 million land purchase in Manhattan, one of the largest assemblages in New York. The former Consolidated Edison
property consists of four parcels on First Avenue, between 35th and 41st Streets.
Edelman has also been active in the hospitality sector in Japan and Mexico.
Having absorbed leading real estate boutique Battle Fowler in 2000, his firm
has a very large local, national and international presence, with over 155 real
estate lawyers total. The firm is noted for property development matters and for
the diversity of its practice.
Around 55 of the firm’s real estate lawyers are in New York, including another
top lawyer, Paul Selver, who deals with land use matters. Selver has also been
involved in advising on the redevelopment of the former Consolidated Edison
site on the East Side.
The Real Deal
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Page 15
THE REAL DEAL
MARCH 2004
TRD11.p65
Marty Edelman
Of Counsel, Real Estate Department
PAUL, HASTINGS, JANOFSKY & WALKER
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