West Side story encore

Donald Trump is suing his Hong Kong business partners in New York's highprofile Riverside South development.

The recent sale of Riverside South linked real estate titans Donald Trump and Sam Zell, as well as global private equity firm The Carlyle Group, in what is considered by many to be the largest residential real estate deal in New York City.

But less than a month after the sale was made public, Trump sued his former partners – a group of real estate tycoons from Hong Kong led by Henry Cheng and Vincent Lo – in Manhattan’s US District Court, claiming that the $1.76 billion (€1.5 billion) price was well below what other bidders were offering.

Trump, who had a 30 percent stake in Riverside South, claims in the suit that his partners are “reckless, uninformed or grossly negligent” and alleges fraud, misrepresentation, gross negligence, tax avoidance and conflict-of-interest.

According to Trump, Colony Capital bid $2.9 billion for the property, while New York developer Richard LeFrak offered $3 billion. The suit also says Barry Sternlicht, founder of hotel investment group Starwood Hotels and Resorts Worldwide, was interested in the project, something a spokesperson for Starwood later denied in the press.

Following the filing of Trump’s suit, The Cheng Group released a statement saying that Trump was merely trying to squeeze more cash out of them: “The said allegations are malicious and untrue and were deliberately intended by Trump to divert attention from the fact that there is no factual basis for his lawsuit, other than his desire to extract additional money from the other investors to which he is not entitled.”

The response goes on to say that the transaction was completed “after serious and careful consideration of numerous bids by the majority-interest investors to accept the highest ‘genuine’ offer available at the time.”

What the suit will mean for the involved parties is unclear. The private equity real estate arm of Washington, DC-based Carlyle worked with developer Extell Development Company on the transaction, agreeing to sell the site’s three completed apartment buildings to Equity Residential, developer Sam Zell’s publicly traded real estate investment trust, for $816 million. Carlyle will retain control of the remaining property, a swath of land along the Hudson stretching from 59th Street to 65th Street.

Despite the lawsuit, The Donald and his former partners may have more in common than they think. Lo, of The Cheng Group, made his fortune in Shanghai real estate and now has a new show on Chinese television, “The Winner,” loosely based on Trump’s reality TV show “The Apprentice.” In Lo’s version, contestants are given money to start their own businesses with the best businessperson winning 1 million yuan ($121,000; €100,000).


Coventry lures Citigroup banker
New York-based private equity real estate firm Coventry Real Estate Advisors has named David Hirschberg, a former real estate investment banker at Citigroup, a principal of the firm. An eleven year veteran of Citigroup, primarily in the firm’s real estate group, Hirschberg will reportedly focus on underperforming properties and those with expansion opportunities while at Coventry, which specializes in retail assets. For each of its investments, the firm partners with Developers Diversified Realty, a publicly traded operator of shopping centers. Coventry was founded in 1998 by former Morgan Stanley professional Peter Henkel. The firm closed its second fund, Coventry Real Estate Fund II, on $330 million in March 2004.

MacFarlane Partners nabs UBS pro
MacFarlane Partners, a San Francisco-based real estate firm specializing in urban development and redevelopment projects, has named Jeff Mills a senior vice president of asset management. Prior to joining MacFarlane, Mills was a San Francisco-based director at UBS Realty Investors, the real estate arm of the Swiss bank, where he worked both in acquisitions and asset management. At MacFarlane, Mills will oversee the firm’s owned and ongoing assets. In March, the firm formally acquired a minority equity interest in the retail and parking garage assets at the AOL Time Warner Center in New York City through a joint venture with the building’s co-owners The Related Companies and Apollo Real Estate Advisors.

LEM Mezz makes two senior hires
Philadelphia-based LEM Mezzanine, the real estate mezzanine and preferred equity affiliate of private equity real estate firm Lubert-Adler Partners, has added two senior professionals. Brian Morris, formerly a director in GE Real Estate’s Strategic Capital Group, has joined the firm as a managing director. LEM has also added Avis Tsuya, formerly a vice president at GMAC, as a senior vice president in charge of asset management. The firm is part of the Independence Capital Partners family of funds, comprising LEM Capital; Lubert-Adler Partners, three real estate opportunity funds with $2.4 billion under management; Quaker Bioventures, a $200 million life sciences fund; and LLR Partners, a middle market private equity firm managing over $600 million.

Canada Pension names real estate head
The CPP Investment Board, which manages approximately C$44 billion in assets, has named Graeme Eadie, vice president of real estate investments, with responsibility for the entire real estate investment team. Eadie was formerly the president and chief operating officer of commercial real estate company Cadillac Fairview. CPPIB invests the funds not needed by the Canada Pension Plan to pay current benefits. As of March 31, 2005, CPP managed C$81.3 billion in assets. Although CPPIB had only one percent of its assets allocated to real estate at the end of 2004, it has pledged to increase that allocation to 10 percent over the next decade.

Former Miller Global CFO joins REIT
Denver-based real estate investment trust Apartment Investment and Management Company (Aimco) has named Robert Walker IV a senior vice president of the company. Effective January 2006, Walker will become Aimco’s chief accounting officer when Thomas Herzog, the company’s current CAO, becomes chief financial officer. Herzog and Walker worked together at GE Capital Real Estate, where Walker served most recently as global controller until June 2002. Since then, Walker has been the CFO at Miller Global Properties, a Denver-based private equity real estate firm.


Blackstone acquires Florida offices…
The Blackstone Group has acquired the T-Rex Corporate Center in Boca Raton, Florida for $193 million (€159 million). The 1.7 million square foot, 123-acre complex was purchased from New York-based investment group T-Rex Capital, which will retain a minority interest in the property. The center is 85 percent leased to tenants including Everglades College, Applied Card Systems, Morgan Stanley, Tenet Healthcare, Lydian Trust, American Media and Bluegreen Corp. T-Rex has around $1 billion in real estate assets across the US.

…while Apollo sells
New York-based Apollo Real Estate Advisors has sold four office buildings in West Palm Beach, Florida to JP Morgan Fleming Asset Management Company for $92.5 million (€76.3 million). The properties are comprised of more than 442,000 square feet of floor space; each building is between 88 percent and 97 percent leased. John Jacobson, a managing partner at Apollo, said in a statement that the firm is working to liquidate its second real estate fund by “aggressively managing the sales process.”

Thayer sells Washington Marriott
Annapolis, Maryland private equity real estate firm Thayer Lodging Group has sold the Marriott Wardman Park, Washington, DC’s largest hotel, to The JGB Companies and the CIM Group for $300 million. The firm also sold its 1995-vintage fund, Thayer Hotel Investors II, to Boston-based Pyramid Hotel Opportunity Fund. That portfolio included eight hotels across the US, for a total of 2,200 rooms. The firm’s latest vehicle, Thayer Hotel Investors IV, closed on $238 million (€196 million) in 2004.

Apollo backs NYC urban redevelopment project
Apollo Real Estate Advisors is the lead investor in a $500 million (€413 million) redevelopment project in the Flushing neighborhood of Queens, which is a joint-venture between The Rockefeller Group and TDC Development and Construction. The project, called Flushing Commons, will feature open space, a recreational center, a hotel, 500 residential units and 350,000 square feet of retail space. New York-based Apollo is currently hoping to raise $500 million for its fifth US real estate fund. The firm’s last fund closed in 2000 on $1.1 billion.

Investcorp acquires Philadelphia offices
The real estate arm of global investment group Investcorp has acquired four office buildings and one industrial asset from the O’Neill Properties Group. Terms of the sale were not disclosed, but the five parcels total 638,626 square feet of space in the suburbs of Philadelphia. The firm expects to acquire a sixth property from O’Neill later this summer, continuing a 2005 shopping spree that has racked up 11 properties for $400 million (€330 million). Last year, Investcorp spent more then $780 million on real estate acquisitions. Investment activity for 2005 is expected to top $900 million.

Praedium sells office building for $25m
New York-based private equity real estate firm Praedium Group has sold the Maitland Forum office building in Maitland, Florida to Orlando, Florida-based Tower Realty Partners for $25 million (€21 million). Praedium bought the building, which has 266,881 square feet of office space, in September 1999.

Wine REIT picks up new vineyards
Vintage Wine Trust, a REIT focused on the wine and vineyard industry, has purchased the Iron Corral and Gravelly Ford vineyards, located in Napa Valley, California, for around $16.5 million (€13.6 million). Iron Corral is a 192-acre vineyard producing the Cabernet Sauvignon, Merlot and Syrah varietals, while Gravelly Ford is a 769-acre property producing grapes for French Colombard, Zinfandel and Ruby Cabernet. According to the company, the purchase was funded with proceeds from the REIT’s March 2005 private equity offering. Vintage Wine Trust has acquired $90 million in vineyards, totaling around 3,600 acres.