Africa-Israel Investments Ltd. (TASE:AFIL) subsidiary AFI USA Inc. has filed a petition with the New York State Supreme Court in Manhattan against the sale of the Apthorp building's $385 million mortgage by Anglo-Irish Bank Corporation to Texas private equity firm Lone Star Funds. AFI USA and Mann Realty Associates contend that the bank must keep a 51% interest in Apthorp Associates LLC's loan, and that the sale of the mortgage is a breach of the loan agreement.
Apthorp Associates states in the complaint, “Apthorp’s express contractual right to have a single majority lender on the project throughout the term of the loan will be lost absent prompt injunctive relief, thereby causing it irreparable harm." It adds, “Continued financial commitment to the conversion project by the same lender (or substitute lender acceptable to Apthorp) is critical to its smooth operation."
"The Wall Street Journal" reports that the AFI USA and Mann Realty missed a payment to Anglo-Irish Bank in June, but that the bank, which was in the process of auctioning the mortgage, didn’t want to cheapen the loan’s value by declaring it in default, and gave it a 30-day extension instead. The paper quotes sources as saying that JSR Capital LLC, an investment firm started by a former Africa Israel employee, bought a dozen condos in the Apthorp at a discount, enabling the companies to make the payment and avoid default.
The Apthorp is a historic building on Manhattan's Upper West Side built by the Astor family in 1908. Africa-Israel, controlled by chairman Lev Leviev, and Maurice Mann bought the building for $426 million in 2007, one of the highest prices ever paid for a rental building. They are converting the property's 163 apartments into condominiums, and have sold 50 of them to date. Sale prices have been much lower than anticipated: a 218-square foot condo was sold for $2.86 million compared with the asking price of $6.61 million.
The nationalized Ango-Irish Bank is selling its $9.65 billion US real estate portfolio. According to "Bloomberg", JPMorgan Chase & Co., Wells Fargo & Co. and Lone Star Funds won the bidding for the bank's portfolio.
Africa-Israel's share price rose 2.2% in morning trading today to NIS 10.54, giving a market cap of NIS 1.22 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2011
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